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Almost half (47 per cent) of those aged 18 to 24 said they intend to work part time in retirement, while 29 per cent expect to stop work completely, analysis from Standard Life has found.
In contrast, the analysis, part of Standard Life’s Retirement Voice Report, found that less than one in five (17 per cent) of current retirees moved to part time work once they reached retirement age, while 76 per cent stopped work entirely.
Given almost half of 18- to 24-year-olds intend to work part time after reaching retirement age, Standard Life conducted further analysis, which showed that a gradual wind-down of work could add a “significant” amount to a pension pot’s value.
Indeed, the report showed that someone who began working on a salary of £25,000 per year and paid the minimum monthly auto-enrolment contributions (5 per cent employee, 3 per cent employer) from the age of 22, could have a total retirement fund of £434,000 by the age of 66.
Meanwhile, someone who worked three days a week from the age of 66 to 70 could add £87,000 to their pension pot.
Commenting on the research, Standard Life’s managing director for retail direct, Dean Butler, said: “People’s approach to retirement is shifting, with many preferring to gradually ease into retirement by reducing working hours rather than suddenly stopping work altogether.
“Younger generations perhaps realise that the onus will be on them, rather than their employer, to ensure they have enough to live in throughout later life and retirement.”
He noted that as pension policy has evolved, individuals now have “much more” responsibility for funding their retirement which may mean working for longer, while older generations have “largely” benefited from defined benefit pensions which have provided financial security and allowed many to move into full retirement immediately.
“For future generations who will be retiring into a very different pension landscape than their predecessors, reducing working hours or taking on part-time work can not only boost pension savings, but it’s also a healthy way to phase into retirement and start to understand what the day-to-day reality of life without work looks like,” Butler added.
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