When you reach retirement age, then you retire, right? Er, no.
According to a fascinating release from the Office for National Statistics, published on September 12, record numbers of the over-65s are in employment.
And that word ‘record’ isn’t to be taken lightly: not only did the number of over-65s in employment reach a record level (1,468,000 people) in the three months ending June 30, but the quarter-on-quarter increase of 173,000 was also the highest on record.
Old age isn’t what it was
Now, we’re all living longer these days — and staying healthier for longer. 65 and over, you might think, is not what it was. Consequently, these days the state pension kicks in a little later, in acknowledgement of these trends.
So compared to — say — 20 or 30 years ago, some element of working past 65 might be expected.
But that doesn’t explain the current rocketing increase in the number of over-65s in employment. Or why the number should have hit a record high this particular quarter.
We’ll perhaps know a little more at the end of September, when the Office for National Statistics publishes the second phase of an over-50s lifestyle study, part of which probes people’s motivation for leaving the workforce, or re-joining it.
Are we seeing the cost-of-living crisis at work?
Commentators, however, have their own take on things. And it’s a viewpoint that I find persuasive. Very persuasive.
The reality is that for huge numbers of people, retiring early has been a long-held dream. It’s what people work towards.
In my social circle, a significant proportion of people have done precisely that. Yours too, most likely. So why on earth head back to work?
Perhaps it’s because some people, I know, are starting to feel the pinch.
And many more will probably do so, perhaps, when the cost-of-living crisis begins to really bite. Recession or not, I’m expecting the numbers of over-65s in employment to continue to climb — and I’m not alone in that view.
Not least because, in an era of labour shortages, employers are making it ever easier for older employees to join the workforce.
Every little helps
And as it happens, confirmation of this hypothesis is readily seen in the Office for National Statistics’ figures.
In which sectors of the workforce is the increase in over-65s in employment greatest? The answer: part-time employment, and part-time self-employment — and often in those industries and occupations that make it easier for part-time work to be a practical proposition.
Which provides a form of corroboration for the cost-of-living hypothesis: it’s not people returning to work full-time — it’s people doing some part-time work to top up their earnings, because their pensions no longer stretch quite far enough.
Which is quite a different picture from the image conjured up by all those over-65s that we see in all those stock photographs in newspapers and magazines, where prosperous-looking silver-haired couples stroll hand-in-hand along tropical beaches.
The reality might more likely be shelf-stacking in your local supermarket.
The champagne lifestyle — or the homebrew one?
What to do?
For a start, dig out your latest pension projection — or if you’re in an occupational pension where these are only sent out infrequently, request one, or log on and look at the numbers in real time.
Usefully, such projections tend to provide estimates of future pension income expressed in terms of 2022 pounds. So seeing how far your money will stretch is fairly straightforward.
Naturally, don’t forget to add to your projected income any state pension that you’ll receive. Again, getting a projection of this is just a matter of requesting it.
Throw the numbers in a spreadsheet, knock together a basic budget, and see what your future looks like.
Is it champagne — or homebrew?
Penury isn’t pleasant
Does that future look appealing? Great, if so.
But not so great if the prospect of working past 65 doesn’t appeal — particularly so if your personal circumstances mean that your normal line of work isn’t an option.
Shelf-stacking — or something similar — might then beckon.
Extreme, I know. But I’m willing to bet that among those 1,468,000 over-65s in the workforce, examples of this could be readily found.
Build a second income stream
Again, what to do? Saving more, to build up a cash buffer, might be one way forward. But in the last year, we’ve seen how quickly inflation can rocket upwards, destroying the purchasing power of cash savings.
Investing more, on the other hand, makes a lot of sense — and to me, even more sense if you do it in the form of a Self-Invested Personal Pension (SIPP) or ISA, where the investment objective is building up an income flow, rather than capital growth.
Set your investments to deliver an income stream, and watch the month-by-month impact that you’re having on your future lifestyle.
There’s nothing wrong with homebrew — I enjoy a glass myself. But you can’t beat the taste of knowing that you can actually afford the champagne option, should you want to.