Nearly a quarter of middle class workers aged over 50 delaying retirement until they are at least seventy, according to new research from wealth managers Heartwood.

The research further reveals that:

·         Almost two thirds expect to enter semi-retirement

·         Four in ten (41%) are planning to remain in work for an average of five years longer than they had originally planned.

·         Yet only 31% of retired people said they had been semi-retired and on average they were in semi-retirement for less than two years prior to leaving work for good.

·         33% of higher-earning semi-retirees said they couldn’t afford to while 18% blamed the higher cost of living

·         20% said they needed to keep working in order to support their children and 18% cited the fall in the value of their pension

The new study by Heartwood¹ suggests that semi-retirement among wealthier people is becoming an increasingly necessary and complex life stage, with nearly a quarter (24%) of middle class workers aged over 50 delaying retirement until they are at least seventy. Almost two thirds (63%) expect to enter semi-retirement and four in ten (41%) are planning to remain in work for an average of five years longer than they had originally planned. This is a growing trend, as in contrast only 31% of retired people said they had been semi-retired and on average they were in semi-retirement for less than two years prior to leaving work for good.

It is expected that this movement will continue over the coming years, enhanced by the announcement this week that the default retirement age in the UK has now been fully abolished, making it easier for people to put off full retirement for longer. 

For the majority, this is not driven by a love of their job but by concerns of their ability to fund their retirement. When asked why they were delaying full retirement, a third (33%) of higher-earning semi-retirees said they couldn’t afford to while 18% blamed the higher cost of living.  One in five (20%) said they needed to keep working in order to support their children and 18% cited the fall in the value of their pension.

Simon Lough, Chief Executive of Heartwood comments: “Longer periods of semi-retirement are increasingly becoming the norm amongst even wealthier people in their fifties and sixties. In many cases they are being faced with greater demands being placed on their pension pots, rises in the cost of living and unexpected financial commitments such as supporting their children for longer than they originally anticipated. 

“Even compared to a year ago the number of semi-retired people has grown by 43% and we would expect this trend to continue as economic pressures force people into having to generate additional income for longer, making it more important than ever to start planning as early as possible.”   

Heartwood offers retirement planning services, usually in parallel with investment management. These services cover the entirety of retirement planning and management from initial review and plan construction, through retirement and into ‘drawdown’². Heartwood can provide advice on a range of pension scheme arrangements including SIPPs, SSASs, stakeholder and employer schemes, although the primary focus is on SIPP and SSAS arrangements.      

For further information on Heartwood, visit www.heartwoodgroup.co.uk.

¹ The figures quoted in this release are based on an independent survey conducted by ICM. A total of 830 adults aged 50 and over were interviewed.

² Drawdown is a form of pension arrangement that allows you to take your maximum tax free cash at the outset and defer your annuity purchase.

Heartwood provides integrated investment, tax and retirement planning solutions for ultra high net worth and high net worth individuals from its offices in London and the South East. Heartwood now manages and administers over £1.3 bn of funds for clients.