The Rise of “Unretirement”: Why more people are returning to work

Retirement has long been viewed as a time to enjoy the holiday you didn’t have time to take or spend time looking after grandchildren after decades of hard work. However, a growing number of retirees are finding that the reality does not always match the expectation – and the reason for this? Money! Or the lack of.

Research from Standard Life shows an emerging trend of people who are “unretiring,” with many people either returning to work or considering going back. So why is this?

Financial pressures

According to Standard Life’s research, one in six retirees (16%) have either gone back to work (8%) or are thinking about returning (8%). While some individuals choose to return for social reasons, 24% say they have returned due to feeling lonely or disconnected without work. However, the dominant factor is due to financial reasons.

Rising living costs (including the cost of fuel and food) have significantly impacted retirement finances. Nearly a third of retirees (30%) said their standard of living is worse than before they retired, compared with just 22% who say it has improved. The gap shows the growing challenge many people face in enjoying financial security after leaving work.

A lack of preparation

The research also revealed that many people feel underprepared for retirement. 20% said they underestimated how much money they would need, while 21% wished they had planned their retirement more thoroughly. 19% say they did not fully appreciate how long their retirement would last.

“Often people come to us excited for retirement, but with no real understanding of how much money they will actually need to fund the retirement lifestyle they want” says Emma Cherrington, chartered financial planner

 

“While they may have assessed their current finances and realised there’s a shortfall, they often overlook how rising living costs and an unpredictable economic environment could further impact their retirement fund”

Inflation and the Impact on Retirement Income

Inflation has really impacted on people’s retirement pots e.g. £100 in 2020 is now worth just £78.25. For retirees, especially those without inflation-protected income such as defined benefit (DB) pensions, this can be particularly difficult to manage.

Those who retire before reaching state pension age, or who rely on savings and investments, often face additional pressure to make their income last. This may mean taking on more investment risk, which is no guarantee of higher growth, or seeking alternative sources of income such as returning to work.

More People Working Later in Life

Data from the Department for Work and Pensions (DWP) shows an increase in the number of people aged over 65 who are still working.

Although a slight dip was seen during the pandemic, since the 2021–2022 period the trend has returned, with more retirees re-entering employment.

“More people are reaching their 60s and realising they haven’t made adequate plans to retire when they had expected. As a result, many feel they have no choice but to keep working in order to build up their retirement savings” says Emma.

A Changing View of Retirement

Retirement is no longer defined by a single day when work ends for good. For many people, it is becoming a more gradual transition, with part-time roles, consultancy work, or other forms of income continuing into later life.

While this added flexibility can bring both financial and social advantages, it also highlights how much more complex retirement planning has become.

With living costs rising, life expectancy increasing, and ongoing economic uncertainty, careful planning is essential to achieve a retirement that is both comfortable and sustainable. Without this, working longer isn’t a choice, but unfortunately a necessity.

At Active Chartered Financial Planners, we encourage everyone to consider their retirement well in advance, but don’t worry that you have left it too late. Even if you are nearing retirement, there may be things that you can do now that will make a significant difference to your later.