Working life no longer stops at retirement

Mar 29 2006 by Nic Paton Print This Article

More and more people who have officially retired are working part-time to supplement their income, a new study has found.

The research has published at the same time as a separate study from the U.S has concluded that many workers will be unable to retire when they expect because they have not saved enough.

The first study, by insurer GE Life, has estimated that 10 per cent of retired people now work part-time for an average of 14 hours per week to supplement their income.

But this figure is set to increase dramatically as the pensions' gap and longer life spans bite, the study of 500 people has suggested.

Almost one in five of those polled believed they would need to continue working part-time once they retire – double the number of those currently retired.

With the average pension fund producing an income of just £4,381 a year, many retired people admitted they could have planned better.

A third admitted to being financially unprepared, while a similar proportion unsure how they would survive the rest of their retirement.

More than half of those nearing retirement said they wished that they had started saving earlier.

Scott Dolfi, chief executive of GE Life, said: "Across the board, the biggest shock at retirement is certainly the financial one. Continuing to work in retirement – the concept of the part-time pensioner – is one way of responding to financial pressures, but is one that people may be able to avoid with more careful planning before retirement."

The second study, of more than 1,000 U.S workers by Aon Consulting, found 39 per cent believed half or more of their workforce would not have enough savings to retire between the ages of 62 and 65.

Worryingly, despite having many employees facing retirement challenges, few companies were modifying their retirement plan designs, the survey found.

Just 20 per cent were actively reviewing their retirement plans, while 80 per cent were not considering near-term changes.

While 76 per cent believed retirement education was important, very important or absolutely critical, just 1 per cent were communicating such information to employees on a regular basis.

"Employees face a broad array of retirement plans offered by their employer, with different availability based on job type and when an employee was hired," said Chris Bone, executive vice president with Aon Consulting.

"Today more than ever, employees control their retirement future, a responsibility that can't be taken lightly. Increasing life expectancies, multiple job changes and greater diversity of family resources in retirement, make it critical that workers start saving earlier and take full advantage of employer-provided retirement resources," he added.

The GE study also found that nearly all over-estimated the income they would receive in retirement.

Those relying on the state pension expected up to £11,000 more a year than they would receive, and those with private plans over-estimated pension income by £2,000 a year, it added.