Financial pressures pushing one in seven retirees back to work

29th January 2025

One in seven retirees are returning to work or are considering doing so, with financial pressures, a lack of pension provision and desire for social connection driving this, according to new research from Standard Life.

7% of retirees aged over 55 have already gone back into work, with a further 2% actively looking for employment. Another 6% say they are considering going back to work too.

Income-related factors have driven a significant number of over 55s to unretire and re-enter the workforce. Over a third (34%) have found their living costs have increased while 27% have realised their pension is not providing enough income to live on. Meanwhile, over two in five (43%) want to earn more money so they can treat themselves more in retirement.

Others that have gone back to work post-retirement cited social reasons, with 38% feeling bored, and 20% feeling lonely.

With many retirees returning to work because of their finances, Standard Life’s analysis suggests that gradually easing into retirement by winding down work could provide an alternative to today’s cliff-edge retirement model, while improving finances adding a significant amount to the overall value of a pension pot.

For example, someone that began working on a salary of £25,000 per year and paid the minimum monthly auto-enrolment contributions (5% employee, 3% employer) from the age of 22, could have a total retirement fund of £193,000 by the age of 66 – in real terms, adjusting for 2% inflation a year. However, someone that worked 3 days a week from the age of 66 to 70 could add £27,000 to their pension pot. Working just 1 day a week for a few years after reaching retirement age could add as much as £21,000 to a retirement fund – £18,000 from fund growth due to delaying starting to access pension savings from 66 to 70, and £3,000 due to the additional contributions of working one day a week. 

Mike Ambery, Retirement Savings Director at Standard Life, part of Phoenix Group said “Money isn’t the only reason people return to work after retiring – but it certainly seems to be a big factor. Recent retirees couldn’t have foreseen the cost-of-living issues that have squeezed their retirement incomes, and many are now being forced to rethink their plans and return to work to supplement their income.

“Fewer people currently saving for retirement have gold-plated employer pensions, guaranteeing a set income in retirement, with more of us having to consciously engage and manage our own arrangements. It’s therefore vital for today’s workers to take an interest in their pension throughout their careers. Being aware of how much you’re saving now and if it’s likely to grow to be enough for you in retirement is just one simple step that can help people prepare for their desired retirement and take steps to better prepare their finances for when they eventually stop working. It might be worth those thinking about how to take their pension money, and make it last, considering guaranteeing all or part of their retirement income via an annuity – particularly as annuity rates have risen over the last couple of years. This could be a good way of ensuring that the basics are covered.

“In future it’s likely that more people will shun the traditional cliff edge retirement and instead gradually reduce working hours or take on part time work. The good news is that in addition to boosting their pension savings, they can also begin to experience the day-to-day reality of life outside the workplace.”

Catherine Foot, Director of Phoenix Insights said “Returning to work can be hugely beneficial for over-50s when it comes to earning, saving and the sense of purpose it brings. While some have enough finances to retire early out of choice, many fall out of work in their 50s and 60s due to reasons such as caring responsibilities or ill health and plan to return as soon as they are able. Phoenix Insights found the average total wealth for a 50-64-year-old out of work due to ill health is just £57,000, less than 5% the wealth of those who retire early out of choice (£1.24 million).

“However, the over-50s face significant barriers to re-entry. This is primarily due to a lack of opportunities and insufficient provision of good quality flexible work that people working later in life desire. Being out of work before state pension age is a major driver of pre-retirement poverty, so it’s critical the government and employers to better support this group to remain in employment. Providing access to flexible work is one of the most important factors to enabling this.”

Impact of working past retirement age

Pension savings retiring aged 66 Pension savings stopping work at 66, and accessing pension at 70 Pension savings working part time for 1 day a week from 66 to 70 Pension savings working part time
for 2 days a week from 66 to 70
Pension savings working part time
for 3 days a week from 66 to 70
£193,000 £211,000 £214,000 £218,000 £221,000
+£18,000 +£21,000 +£24,000 +£27,000