Retirement plans on hold due to cost of living crisis

A fifth of over 40s have delayed their planned retirement date because of the cost-of-living crisis, according to new research by My Pension Expert.

Its survey of 1,254 UK adults aged 40 and above found that 37% of those in work believe the cost-of-living crisis has made retirement impossible for the foreseeable future. The exact same number (37%) believes this whether they were in the 40-54 age group and whether they were the over-55.

Just over one in five (21%) have delayed their retirement date due to rising inflation. Meanwhile, of the over-40s currently in work, 7% said they had “unretired” in 2022 because inflation meant they needed to top up their retirement savings.

Only a third (33%) said their pension savings and investments are managing to hold their value in the face of rising inflation, while 7% have switched pension providers or plans in 2022 to achieve better returns.

The survey also showed that despite concerns over their finances and many having to unretire, only 13% of over-40s in the UK have spoken to an independent financial adviser about their pension strategy.

Andrew Megson, executive chairman of My Pension Expert, said: “Given many are changing their pension plans, the fact so few have sought financial advice is concerning. An adviser can help planners assess their retirement strategy based on their financial circumstances and needs, balancing that against the economic situation. It is a question of deciding how to save or invest and the types of products that are right – from annuities to flexible-access drawdowns. There is no one-size-fits-all. People need advice tailored to their situation.

“For this reason, it is crucial the Government works to improve access to independent financial advice, ensuring people understand advice is for all and not just the wealthy. Doing so will prevent savers making rash or risky decisions involving their retirement finances in an effort to counter inflation, instead leading them to the comfortable, secure retirement they deserve.”

Job vacancies

The survey comes as Office for National Statistics figures show job vacancies are still high, despite a fall on the previous quarter,  with unemployment at 3.6%, the lowest since 1974 and economic inactivity, in part due to long-term health issues, a continuing issue amid ongoing staff shortages.

The ONS says job vacancies are still above pre-Covid and early 2021 levels. In June to August 2022, vacancies were 470,000 (59.1%) above the January to March level and 215,000 (20.4%) above the same time last year.

The industry sectors showing the largest falls in vacancy numbers were the information and communication industry, which was down 11,000 vacancies and the professional, scientific and technical activities industry, which was down 8,000 vacancies on the quarter. Human health and social work had the largest increase in vacancies, up by 7,000 on the quarter.

The ONS says the fall in vacancies, the second quarterly fall in consecutive periods, “may reflect uncertainty across industries, with an increased number of respondents reporting recruitment freezes”.

It also notes that the increase in vacancies since Covid is due to employee jobs, with self employment having fallen sharply.  It says employee jobs in June 2022 have continued to grow and are now at a record high of nearly 31.5 million, 710,000 above their December 2019 pre-coronavirus level. Despite a rise this quarter, self-employment jobs, however, remain 548,000 below December 2019 levels.

The jobs vacancies are driven in part by the high rate of economic inactivity rate, which increased by 0.4 percentage points on the quarter to 21.7% in May to July 2022. This was largely linked to students aged 16 to 24 years and long term sickness among 50 to 64 year olds.

Tony Wilson, director of the Institute for Employment Studies, highlighted the number of people who are out of work due to long-term ill health, which is rising faster than at any point over at least three decades. He said this should be “sounding alarm bells in government”.

He stated: “This weak jobs recovery is being driven by more people out of work due to long-term ill health, up by 350,000 since the pandemic and by 130,000 in the last three months alone.  NHS waiting lists, poor mental health, a lack of specialist employment support and long covid will all be playing a part in this, but whatever the reasons we need to do far more to help those with ill health to prepare for, find and keep work.

“For a government that wants to cut taxes to boost growth, today’s figures also spell trouble.  If we don’t do more to help more people into work, then any tax cuts will just lead to even higher inflation and higher interest rates for longer.”

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