New data from the Office for National Statistics (ONS) show that nearly one in 10 workers aged 65 and over have stopped working since the Covid-19 lockdowns began at the start of 2020.
Commenting on the latest ONS Labour Market figures, Stephen Lowe, group communications director at Just Group, said: “The latest figures show that employment among those aged 65+ was 1.28 million in the three months to August which is 122,000 less than the first three months of the year. That is a fall of 9% or nearly one in 10 workers which is worse than for any other age group except those aged 16-17.
“The fact that the unemployment rate has also fallen strongly suggests that people in this age group have been heading into retirement in greater numbers rather than trying to stay in the workforce.
“The inactivity rate showing the proportion in this age group who are retired had gradually been falling for many years, but in recent months it has picked up and the inactivity number has risen by 207,000 since the first three months of 2020.”
This latest data raises the question of whether this age group are choosing to retire earlier than normal due to the ongoing Covid-19 pandemic – not only due to the possible danger to their health, but due to the lack of job opportunities available.
If people are choosing to retire early, it is important to have a retirement plan in place.
Many potential retirees are unaware of how much they will need for their retirement and some are embarking on “panic withdrawals” from their pension pots which is a mistake says Chris Ball managing partner at Hoxton Capital Management.
Ball says: “Most retirees that are participating in this are highly likely to be financially unaware or uneducated. They do not have a thorough understanding of the consequences of their actions and are unaware of the repercussions due to lack of general financial knowledge, as well as the lack of a personal financial adviser.”
Just Group’s Lowe has some further advice: “It’s important that people thinking of taking pension money use the free, impartial and independent guidance from Pension Wise that all those with defined contribution schemes are entitled to receive. It helps people fully understand their options and the long-term consequences of pension decisions made at the point of retirement.
“The State Pension Age reached 66 this month but it seems the Covid-19 effect has been to reverse the increase in the number of people working later in life. It appears that the policy of encouraging people to work later in life may be among the casualties of Coronavirus for some time to come.”