The coronavirus (COVID-19) pandemic crisis has left many people’s retirement plans up in the air. According to new research, 15% of people over 50 and in work are set to postpone retirement by an average of three years, with 26% stating they would keep working indefinitely as a direct result of COVID-19. George Square Financial Management highlights the key findings from the research.
The coronavirus pandemic is forcing a widespread rethinking of retirement plans. Currently, 1.5 million workers aged over 50 are planning to postpone retirement as a direct result of the pandemic, with the most recent data from the Office for National Statistics revealing the number of workers aged above 65 years is at a record high of 1.42 million. The more people change their retirement plans in response to the pandemic, the more likely this figure will increase.
Delaying retirement plans: the impact of COVID-19
While some people will choose to work for longer, or indefinitely, the key takeaway from the new findings is that it appears this decision has been driven by the financial impact of COVID-19 rather than by personal choice.
Conducted by Opinium Research, the research found that one in six people aged over 50 and in work believe that they will delay their retirement, while 26% anticipate having to keep working on a full or part-time basis indefinitely due to the impact of the virus. On average, those who plan to postpone retirement expect to spend an additional three years in work, with 10% admitting they could delay their plans by five years or more.
These figures are significantly higher for over-50s workers who have been furloughed or have seen a pay decrease as a result of the pandemic. 38% of these workers expect to work indefinitely.
Accessing pensions earlier than planned
20% of over-55s who hadn’t accessed their pension prior to the crisis have since either taken out money from their pension or are considering doing so because of the pandemic. The self-employed have been particularly affected, with two in five forced to rethink retirement plans.
Accessing pension benefits early may impact on levels of retirement income and your entitlement to certain means-tested benefits. It is therefore not suitable for everyone. You should always seek advice to understand your options at retirement.
Are your retirement goals still achievable?
If you’ve seen a material impact on your household income as a result of the pandemic, this will naturally lead to feeling less optimistic about achieving your retirement goals. But, while it would be naive to say that these financial issues will not have an impact on people’s ability to retire, it’s essential for people to have a strong understanding of the options available to them before concluding that their retirement needs to be delayed.
Retirement income options include lifetime annuities, income drawdown schemes, taking out small cash sums, or mixing up your options. It is always recommended that you discuss your choices with a financial adviser; many pension options are irreversible, so it’s important to seek professional guidance if you are unsure about your decision.
Employment uncertainty, in combination with volatility in the financial markets, is understandably concerning to those approaching retirement age.
If you have been furloughed or have seen a pay decrease, you might also benefit from a financial review to assess your options.
We’re here to help
Is postponing retirement the right approach? Or does staying with your original retirement strategy make more sense? Whatever your long-term plan might be, a crisis as sudden and pervasive as the coronavirus pandemic is bound to raise such questions. To make more sense of your retirement options, please contact the team at George Square Financial Management.
For a free consultation with one of our highly qualified financial advisers, call 0115 947 5545 or send an enquiry here.
Source data:  Opinium Research ran a series of online interviews for Legal & General Retail Retirement among a nationally representative panel of 2,004 over-50s from 15–18 May 2020.  Office for National Statistics, Labour market overview, UK: May 2020.