Around a third of people aged 55 and above who are in some form of work have started phasing into retirement, according to a survey.
A Legal and General poll reveals that 44% of pre-retirees are taking the phased retirement route because they cannot afford to retire fully, while 37% are reducing their hours so that they can keep their jobs but lessen their stress levels. Taken together, the figures equate to 3.3 million employees.
Almost half of employees aged 55 or above (48%) expect that they will cut down on work rather than stopping completely, with one in seven (14%) planning to wind down in the next year. Some 54% of those phasing their retirement have cut their working time by 15 hours or more every month, with 38% expecting that they will have to adjust their lifestyle and 17% anticipating that they could struggle to meet the cost of household essentials.
Despite the intention to slow down at work, the cost-of-living crisis has had an impact, with one in 10 people who had started to phase into retirement having to increase their work commitments again. Two fifths of people who anticipated moving into retirement gradually during the next five years now worry that living costs might mean their plans are not possible.
Legal and General says that a phased approach to retirement could mean a reduction in income of £9,150 every year, but products such as fixed-term annuities (FTA) can bridge most of this gap. Its internal data shows that the average income of an average pension pot of £73,000 for an FTA taken out by someone aged 55 is £9,000 per year.
The financial services group, which polled 4,000 adults, argues that the findings reinforce the idea that retirement is no longer a line in the sand.
“The number of pre-retirees considering a gradual or phased move into full retirement shows how much the perception of later life has changed in recent years,” said retail retirement managing director Lorna Shah. “However, people choose to approach retirement, it’s important they see it as something that should be actively managed, and not something they already feel they are ‘in’ or have ‘done’.”
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