Has the Covid pandemic prompted a rush to retire early?

For many working in the UK, an early retirement offers people the chance to spend more time doing the things they enjoy most, from seeing friends and family to going on holidays around the world.

Unfortunately, the Covid pandemic could have a lasting effect on the public’s working arrangements, including those nearing retirement age. The rules and restrictions on our daily lives have impacted us in so many different ways, from working from home, to facing the deadly virus on the frontline, and even having to support ourselves with the government’s furlough scheme.

So, it’s no surprise that among all the chaos, workers are asking themselves a lot of questions. How to balance this new lifestyle, what to look for in a job, and when to retire.

Why has the pandemic prompted a retirement rush?

It can be hard to determine this, since the reasons for retirement are wide-ranging and often specific to the individual. However, the Financial Conduct Authority (FCA) found that almost 58% of people who retired between March and October in 2020, did so because of the pandemic. According to the figures, 23% of that number retired because they lost their job or couldn’t find work. On top of that, another 15% of that number retired due to health-related reasons.

Of course, there is a huge difference between someone who wants to retire early and actually being able to. There are after all, a lot of considerations to make before diving into something like this, such as when and how you want to finish work, where and how you want to live.

Before anything else, the primary priority should always be to save as much as you can afford to for retirement, as soon as you can afford to do so.

The Pension and Lifetime Savings Association believes a couple could need an income of around £47,500 a year in order to have a comfortable retirement, but again, people’s needs are unique, and the overall number will depend on your own plans and preferences.

An important factor to remember is that life expectancy ages are rising, and because of this it’s essential that workers save enough to last well into old age.

Click to read our factsheet on our tips on how to save for an early retirement

Sources:

https://www.fca.org.uk/publication/research/financial-lives-survey-2020.pdf

https://www.plsa.co.uk/Press-Centre/Press-Releases/Article/PLSA-launches-Retirement-Living-Standards

Reference – BL126 – Jun – 2021

The content of this article is for general information only and should not be considered advice. Pensions are not normally accessible until age 55. Your capital is at risk. The value of investments can go down as well as up in value and you may get back less than you invested. Your pension income could also be affected by interest rates at the time you take your benefits. The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation and regulation which are subject to change in the future. Accessing pension benefits early may impact on levels of retirement income and is not suitable for everyone