Retirement plans altered for many by pandemic

Research by the Institute for Fiscal Studies (IFS) has found that the Coronavirus pandemic has changed the retirement plans of one in eight older workers.

The latest study is based on a survey from the English Longitudinal Study of Ageing (ELSA), which covered 10,000 people aged 50 and over.

It found that 13 per cent of older workers have already made changes to their planned retirement age due to the ongoing crisis.

Of these, the majority now plan to retire later than originally intended, particularly where the value of their pension fund had been affected by the volatility of the markets.

However, around five per cent of the survey respondents (around 500 people) said they are now planning to retire earlier. This was more common in households with higher wealth or where a person had been furloughed.

Unfortunately, around a third of older workers questioned said that their financial situation was now worse as a result of the pandemic. This was more noticeable among those who were already struggling financially before the crisis compared to those who had greater wealth.

The survey also found that 34 per cent of older workers and 41 per cent of retirees still hold wealth directly in risky assets.

Rowena Crawford, an Associate Director at the IFS, said: “The current pandemic risks having serious and long-term financial consequences for older workers, affecting living standards into and through retirement.

“The crisis has also been disruptive to major life plans, with one in eight older workers so far changing the age at which they planned to retire.

“Those on furlough are now more likely than those working to be planning to retire earlier and it will be important to monitor that this does not represent a rise in involuntary retirement among people discouraged from finding new work.

“On a positive note, those working from home are now more likely to be planning to retire later; suggesting changes to work practices could benefit some older workers.”

Link: Report on financial consequences of the coronavirus pandemic for older people