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Death of traditional retirement makes financial advice crucial

  • Two fifths (40%) of workers at retirement age are working on out of choice
  • Only one in 10 over 65s who work do so just because they need the money
  • New pension freedoms allow older workers more flexibility for phased retirement, but advice is crucial to meet their changing needs

More people in the UK are working beyond retirement than ever before [1], and new research from LV= reveals the majority of ‘Grey Collar Workers’ enjoy it and very few are doing it just for the money.

LV= has found nearly nine in 10 (87%) people working aged 65 and over are happy to be in employment, with two in five (40%) working out of choice and only one in 10 (11%) feeling obliged to work because they need the money. This is in stark contrast to three years ago [2] when a quarter (26%) of people at retirement age were unhappy to still be working.

The study also found people are now choosing to phase their retirement, with one in seven (14%) approaching retirement age opting for semi-retirement, [3] and gradually reducing their hours, rather than retiring straight from full time work.

The pension reforms have given people freedom to retire how they choose, and as a result advisers now have access to a range of hybrid solutions which can be adapted to meet their clients changing needs in retirement. For example, LV=’s Retirement Account allows advisers to incorporate several investment funds together with secure guaranteed income or flexi-access drawdown within one account.

However, with increased choice it’s important people have the support they need to make this decision, particularly as many of those approaching retirement are worried about their savings. LV= also found more than half (55%) are concerned they won’t have enough saved and a similar percentage (56%) think they’ll need to find income from other sources. This makes it crucial people have access to regulated financial advice at the point of retirement, whether that is traditional advice or online, as this will help them get more from their money.

John Perks, Managing Director of Retirement Solutions at LV=, said: “The pension freedoms have given older workers more flexibility to choose the type of retirement they want. However with so many options to consider, and those who aren’t yet retired worried about whether they’ll have enough saved, financial advice has a key role to play in supporting people with this decision. Whether people take traditional advice at retirement or use online solutions, it can help them to shop around and get more from their money, giving them the freedom to decide how long they want to keep working.”

The research is part of LV=’s annual State of Retirement study, which outlines the typical financial situations for retirees, before and at retirement age. The second chapter looks specifically at ‘Grey Collar Workers’; those pensioners working into their retirement, either through necessity or a desire to stay active. The full report will be released in the summer.

[1] According to Office for National Statistics (April 2016) Employment, unemployment and economic inactivity for people aged 16 and over and aged from 16 to 64: A02 NSA, there were 1,167,000 people aged 65 or over in employment between December 2015 and February 2016, in comparison to 891,000 people during the same time period 2010-2011 – a difference of 276,000

[2] According to LV=’s 2013 State of Retirement Report, of those retirees still working, 74% were happy compared to 26% who were unhappy

[3] Of those over 50, 43% were not yet retired (57% were fully retired). Of this 43%, 6% were semi-retired, equivalent to 14% of those approaching retirement being in semi-retirement.

Notes to Editors

The State of Retirement research was conducted by Opinium Research 10-14 March 2016. The total sample size was 1,523 UK adults over 50s. The research was conducted online and results have been weighted to a nationally representative criteria.

Liverpool Victoria Financial Services Limited, registered in England with registration number 12383237. County Gates, Bournemouth, BH1 2NF, UK