Retirement is no longer the full stop it once was. Increasingly, retirees are returning to work—not just for financial reasons, but also for social fulfilment and purpose. New research from Standard Life reveals that one in seven retirees has ‘unretired’ or is considering doing so. This trend highlights the crucial role that financial planners must play in recognising human capital—the skills, experience, and potential earning capacity of retirees—alongside traditional financial planning.
Why Are Retirees Returning to Work?
Standard Life’s Retirement Voice report found that nearly one in ten retirees (9%) over 55 have already returned to work or are actively seeking employment, with a further 6% considering it. While financial necessity plays a significant role, it’s not the only reason people are heading back to work:
- Rising living costs – 34% of retirees returning to work cited the need to keep up with inflation.
- Insufficient pension savings – 27% found that their pension wasn’t enough to sustain their lifestyle.
- Social engagement – 38% reported feeling bored, while 20% said they were lonely.
This data underscores a critical point: a rigid, one-size-fits-all retirement model is no longer serving today’s retirees.
The Case for a Phased Retirement Approach
Rather than an abrupt end to work, a phased retirement model—where individuals gradually reduce their working hours—could provide both financial and emotional benefits. Standard Life’s analysis suggests that continuing to work part-time after 66 can significantly enhance a retiree’s financial position.
For example, consider someone who begins working at age 22 on a salary of £25,000 per year, contributing 5% (employee) and 3% (employer) to their pension. By the age of 66, they may have built a retirement fund of £193,000 (adjusted for inflation). However, if they work just one day a week from 66 to 70, their pension savings could increase to £214,000, and if they work three days a week, they could add an additional £27,000, bringing their total to £221,000.
| Retirement Scenario | Total Pension Savings | Additional Savings vs. Full Retirement at 66 |
|---|---|---|
| Full retirement at 66 | £193,000 | – |
| Stop work at 66, access pension at 70 | £211,000 | +£18,000 |
| Work 1 day/week from 66 to 70 | £214,000 | +£21,000 |
| Work 2 days/week from 66 to 70 | £218,000 | +£24,000 |
| Work 3 days/week from 66 to 70 | £221,000 | +£27,000 |
These figures illustrate how delaying pension withdrawals and making even small additional contributions can significantly impact long-term financial security.
Beyond the Numbers: The Value of Human Capital
While financial capital is essential, human capital—knowledge, skills, and experience—should not be overlooked in retirement planning. Many retirees still have the ability and desire to contribute to the workforce, whether through consultancy, mentoring, part-time roles, or volunteering. Retirement planners who acknowledge and incorporate this aspect into financial plans can help clients:
- Extend their financial security by leveraging part-time work opportunities.
- Stay engaged and purposeful rather than facing an abrupt transition into full retirement.
- Reduce financial stress by supplementing their pension with additional income streams.
A Call for Retirement Planners to Adapt
The evolving nature of retirement means financial planners must move beyond rigid financial forecasts and consider a more holistic approach. By integrating human capital strategies into retirement plans, planners can offer clients greater flexibility, security, and well-being.
At the Academy of Life Planning, we champion a life-first approach to financial planning—one that recognises the full spectrum of a retiree’s potential. This means designing financially sound, emotionally fulfilling, and socially enriching retirement plans.
Empowering Clients for the Future
The traditional idea of retirement is shifting. Rather than a fixed endpoint, it is becoming a transition phase—one that can be planned for strategically. By blending financial capital with human capital, retirement planners can create solutions that ensure their clients thrive both financially and personally.
If you’re a financial planner looking to embrace a modern, holistic approach, consider how you can integrate phased retirement, continued earning potential, and purposeful engagement into your clients’ plans.
Retirement isn’t just about having enough money; it’s about having a fulfilling and sustainable life beyond full-time work.
For more insights into holistic financial planning, explore how the Academy of Life Planning supports planners in redefining retirement for the modern world.
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