Latest employment figures from the Office for National Statistics (ONS) confirm record numbers of over-50s are currently in work.

Canada Life, meanwhile, finds that 13% of UK adults not currently retired, plan to never stop working. This amounts to around 1.5 million people.

While some employed Brits over 50 intend to work for the rest of their lives, others took early retirement during the Covid pandemic, only to “unretire” once lockdowns lifted and the country reopened.

For many, this choice was financial, exacerbated by the cost of living crisis. For others, shifting perceptions of traditional retirement and greater employment opportunities were the catalyst.

As attitudes to work shift, what does this mean for when and how you retire, what your retirement looks like, and your prospects if you opt for “unretirement”?

Keep reading to find out.

An increase in older workers is seen by some as a paradigm shift in how Brits view retirement

The Guardian recently reported on the rise in working over-50s and spoke of a paradigm shift in how we view work and retirement.

Around 3.6 million older people are currently working part-time in the UK. This a record high, that also marks an increase of:

• 12% since 2021
• 26% since 2013
• 56% since 2003.

The article also found that 42% of the UK’s part-time workers are aged over 50. Part-time jobs, though, aren’t always the high-skilled and well-paid jobs experienced workers are best suited to.

Not all of these older workers will be “unretirees”.

The rise in older workers also reflects the shift from a traditional cliff-edge towards a phased and more flexible retirement. The latter has both financial and non-financial benefits.

Working later means you can continue to contribute to a pension while also receiving a wage. You also get the opportunity to use the skills you’ve attained over a long career, possibly to help the next generation.

At the same time, you’re keeping yourself active, sociable, and easing the transition into a time when you can no longer work.

The cost of living crisis is affecting millions but a robust financial plan can ensure that unretirement is a choice

The retirement landscape has been changing for some time.

From 2015’s Pension Freedoms legislation to the raising of the Money Purchase Annual Allowance (MPAA) – encouraging pension contributions later in life through tax incentives – approaching your retirement in 2023 looks a lot different than 20 years ago.

You have more choice than ever, but more responsibility too. Wrong retirement choices can have long-term ramifications. Thankfully, a robust and adaptable financial plan can help.

If the pandemic, the cost of living crisis, or life events have shifted your priorities, it might be time to revisit your plans.

Think again about:

• The age you want to work until
• What you’ll miss about working life
• How you plan to fill your retirement.

You might find that your views have shifted; perhaps you want to work for longer or are considering a move into the volunteer sector to give something back. Equally, you might see the financial incentives as most appealing.

The important thing is taking the time to think about what’s right for you and making an informed choice.

We can help you look at the financial impact of remaining in or returning to work

When Covid struck, it had a polarising effect on the plans of those nearing retirement.

Back in March 2021, Legal and General (L&G) confirmed that while 1.3 million people planned to retire early due to the pandemic, a further 1.45 million had opted to delay retirement by an average of more than three years.

Since then, huge gaps in the job market and a lack of experienced workers have led the government to incentivise a return to work for those aged 50 and over.

The chancellor used his Spring Budget to make several major pension changes:

1. The abolition of the Lifetime Allowance

The Lifetime Allowance (LTA) is a cap on the value of the pension withdrawals you make during your lifetime without becoming liable for a charge.

The LTA charge was effectively reduced to 0% for the 2023/24 tax year ahead of the LTA’s full removal from April 2024.

It’s worth noting, though, that the maximum tax-free cash you can take (assuming you hold no HMRC protection) remains at 25% of the current LTA of £1,073,100 – or £268,275.

2. An increase to the Annual Allowance

As well as removing the LTA, the chancellor increased the Annual Allowance. This is the maximum amount you can contribute to a pension each year while still benefiting from tax relief.

The Annual Allowance increased from £40,000 to £60,000 for the 2023/24 tax-free. This gives you the potential to increase your tax-efficient pension contributions by £20,000 a year.

3. Other pension allowances also increased

While the Annual Allowance rise is good news, it’s important to remember that this might not be the allowance that applies to you.

A lower allowance, known as the “Tapered Annual Allowance”, applies to high earners, though this has also been raised.

If you’re looking to remain in work while still contributing to a pension, you’ll need to be aware of the MPAA. Triggered when you make pension withdrawals using certain flexible options, it lowers your Annual Allowance.

For the 2023/24 tax year, you can trigger the MPAA and still make tax-efficient pension contributions up to £10,000 (a rise of £6,000 compared to the previous year).

Get in touch

Myriad factors will determine the right kind of retirement for you – and the right time. Whether you’re looking for a cliff-edge or a phased withdrawal, a return to paid work or the social interaction of the volunteer sector, we can help.

Contact us today if you have any questions about anything raised in this article, or if you’d like to revisit your long-term retirement plans or discuss a return to work.

Please note

This article is for information only. Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

A pension is a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Your pension income could also be affected by the interest rates at the time you take your benefits.