What is driving the Great Retirement?
In this guest article, Catherine Foot, Director of Phoenix Insights discusses the initial findings from the company’s research into the so-called Great Retirement, which suggests the main driver for over 50s becoming economically inactive is not ill health (16%) but a combination of factors including shifting attitudes to work following Covid-19.
Our new research, ‘What is driving the Great Retirement?’, challenges the widespread assumption that ill health is the primary factor forcing older workers out of the labour market.
In fact, only 16% of 50 to 64-year-olds in the UK gave long-term sickness as their reason for having left the labour market – compared to 26% of the equivalent cohort in the US and 37% in Germany.
However, we do know that Covid-19 has had a profound impact on attitudes to work in this country. Two in five (40%) workers in the UK said that the pandemic made them rethink how they view working, compared to just 28% in the US and 30% in Germany.
A combination of factors seems to be driving people’s decision to leave work. Among those that have left the labour force since 2019, 57% of people in their late 50s told us they were not looking for work because they wanted to retire or look after family.
Relatively high levels of homeownership and the perceived financial security this brings also played a role: 71% of economically inactive 50-64-year-olds in our UK sample were homeowners, compared to 55% in the US and 34% in Germany
How early retirees felt about their most recent job is telling. Despite most (58%) liking their job overall, people in the UK were less satisfied with the number of hours they worked (26%), their work-life balance (25%), their commute (25%) and their levels of pay (20%) than their American and German counterparts. And we found that health conditions do remain a barrier to re-entering work.
On balance, the 4,500 over the 50s we surveyed seemed to have fewer pros than cons for continuing to work. The learning is therefore clear: employers must make work more attractive and accessible if they’re to attract and retain older workers.
Time will tell whether today’s cohort can afford to stay out of work but we know future generations won’t be protected by such high levels of home ownership, so we question whether the Great Retirement is a sustainable trend.
As people live for longer, we want to work with employers and policymakers to make it easier for people to work longer too, where they want or need to.
Taking action to normalise age-diverse recruitment policies, invest in lifelong learning and offer the flexibility people need if they are to work while managing health conditions and caring responsibilities, all have an important part to play.