The research shows that 11% of those already in retirement choose to work part-time. Among those approaching retirement, nearly a third (30%) plan to use part-time work to supplement their income.
The data shows that among those planning to work part-time in retirement, 56% report that keeping busy is one of the key motives. Addressing a retirement income shortfall was cited as a key reason by 52%, while 48% said they valued the social interaction.
People in London and the South are most likely to want to work part-time in retirement. Among those surveyed in London, 63% reported they would continue working part-time and 40% of workers in the South indicated the same. The figure is 33% and 29% in the North of England and the Midlands respectively.
Working part-time in retirement has become easier since 2011 when the Government introduced reforms to prevent employers discriminating against older workers.
There are a number of financial advantages to working part-time in retirement. Employees over the state retirement age do not pay any National insurance contributions. Working part-time in retirement may allow the individual to defer their state pension and potentially leave some or all of their private savings invested. Deferring state pension offers an increase of 10.4% for every year of deferral, although this will decrease to 5.8% following the introduction of new state pension rules in 2016.
Old Mutual Wealth retirement planning expert Adrian Walker says:
“The meaning of the word retirement is changing. Whereas previous generations may have viewed retirement as a chance to switch-off at the end of a challenging career, more and more people are choosing to make a gradual transition into retirement.
“Working part-time in retirement gives people the freedom to enjoy a balanced lifestyle and support a richer and more vibrant retirement.
“Thanks to incoming pension reforms, which allow those age 55 and over to take income from pension savings as they wish, people will now have the freedom to manage their retirement income needs far more flexibly. Working part-time and drawing a small amount from savings in the early years of retirement will be an appealing option for many. They will then have the choice to increase the amount taken from their savings when they choose to stop working altogether.
“However, the option to continue working part-time in later life is no substitute for a long-term retirement savings plan. Those planning ahead can take advantage of tax relief and investment growth in pension savings now in order to ensure they enjoy a prosperous retirement.”
*The survey, conducted by YouGov as part of Old Mutual Wealth’s Retirement Income Uncovered report, polled 1536 UK adults aged 50-75.