Has the financial reality of retirement fallen short of expectations?

Amid rising living costs and market uncertainty, ‘unretiring’ is a growing trend. Research shows that one in six retirees (16%) have either returned to work (8%) or are strongly considering doing so (8%). While some return for personal fulfilment, 24% cite loneliness or social disconnection as key reasons.

Financial pressures remain a primary driver: 30% of retirees report a lower standard of living than before retirement, while only 22% say it has improved. Many feel underprepared, with 20% underestimating how much money they would need, 21% wishing they had planned better and 19% failing to anticipate the
length of their retirement.

Impact of inflation on spending power

Inflation has significantly eroded retirees’ spending power. For example, £100 in 2020 is now worth only £78.25 in real terms. Those without a defined benefit pension or inflation protection face greater challenges in maintaining a comfortable income and often need meticulous planning or are willing to accept higher investment risk. Societal expectations around retirement are also shifting. Retirement is no longer viewed as a fixed endpoint. Although the pandemic briefly accelerated retirements, the proportion of pensioners earning income has risen again since 2021. While the average person aspires to retire at 62, half expect to work beyond their State Pension age.

Balancing benefits and barriers

Returning to work offers benefits such as staying active, maintaining social connections, boosting income and enjoying flexible hours. However, challenges remain. While 78% of people feel confident about working at 60, this figure falls to 49% at 70. Barriers include declining health (39%), retraining concerns (26%) and age discrimination (24%). Uncertainty about retirement lifestyles persists. More than a third (38%) expect their retirement to be worse than their current standard of living, with the figure rising to 49% among Generation X and 43% among women. As a result, retirement is becoming more flexible, with many adopting part-time roles or phased retirement strategies to balance work and personal needs.

Taking control of your financial future

In an unpredictable world, proactive financial planning is essential. Regularly reviewing pension savings, withdrawal amounts and whether your funds will last are crucial steps. Checking your retirement dates and planning for potential income gaps can help you avoid surprises. Exploring phased retirement options and considering the lifestyle you want early on can lead to better-informed decisions. By planning ahead, you can secure your finances and enjoy the retirement you deserve.

Time to review your retirement strategy?

If you’d like to discuss your retirement plans or need professional guidance, contact us for tailored support to ensure your savings last.