Cost of living forcing retirees back into work

14% of retirees aged over 55 have been forced to return to work because their living costs have increased and their pension is not providing enough for them to live on, according to research from Standard Life’s Retirement Voice report.

The report also found a further 4% are considering returning to work.

Men are more likely to have unretired, with 16% saying they have done this, while 5% are also considering it. Only 12% of women have gone back to work and a further 4% thinking about it.

Almost two-thirds (64%) of over 55s who have unretired say that income issues have been the driving force behind this. A third (32%) have found their living costs have increased more than they’d expected, meaning they’ve needed to return to work. While 24% said they had realised their pension is not providing enough income to live on and three in ten (31%) want to earn more money so they can treat themselves more often.

The report comes as the Pensions and Lifetime Saving Association (PLSA) increases the amount of income they believe is needed for a single person to have a moderate standard of living in retirement by 34% from £23,300 in 2022/23 to £31,300 this year.

The uplift has been put down to higher food, energy and motoring costs. It also includes an extra £1,000 a year needed to help family members who are struggling with their own bills.

Standard Life’s research also highlights that many over 55s are currently re-thinking their retirement and financial plans due to ongoing cost of living pressures. More than one in ten (12%) are delaying their plans to retire, while 3% are taking on an additional job to boost their income.

Here’s Standard Life’s tips to maximising your pension savings:

• Make sure you’re taking advantage of all the benefits of your pension plan from your employer. If your employer offers a matching scheme, consider paying in the maximum amount they will match to get the most out of it.
• Getting a bonus this year? Paying some or all of your bonus into your pension plan could save you paying some big tax and national insurance deductions. This means you could keep more of it in the long run, and it could be a great way to give your pension savings a boost.
• Even a small amount could make a big different in the long term, especially if you start young. If you’re able to, think about paying a little more into your pension when you get a pay rise. Find different ways to consider yourself better off such as associated tax cuts. If you choose to increase your contributions as soon as a pay rise or tax cut kicks in, you won’t notice a negative difference now – but could certainly notice a positive one in the future.

What is a pension?

A pension is a tax-efficient way of saving money for your retirement.

There are different types of pensions – one of the most common is a workplace pension, where both you and your employer save.

You might also have a personal or private pension that you set up yourself and pay into.

You can save into several different pensions, as long as you stay within your annual and lifetime limits.

What is the state pension?

You will also get a state pension from the age of 66. The state pensions is a payment made every four weeks by the government to people who have reached the qualifying age.

How much you get from this will depend on your National Insurance record.

The maximum flat-rate state pension is currently £203.85 a week but that is due to rise by 8.5% in April – an increase of £13.30 - thanks to the triple lock.

Those who reached state pension age before April 2016, receive a basic state pension of £156.20, which will also rise to £169.50 from April.

What is the triple lock?

The triple lock was introduced by the Conservation government in 2010. It was introduced to ensure the value of the state pension was not overtaken by the increase in living costs or the working population’s income.

The triple lock ensures the state pension increased every April in line with whichever of these three measures is at the highest:

• Inflation, as measured by the Consumer Price Index (CPI) in the September of the previous year
• The average increase in wages across the UK
• Or 2.5%

What other help is available for pensioners?

Low-income pensioners might also be entitled to Pension Credit to top up their state pension.

Pension credit is worth

• £201.05 if you’re single
• £306.85 if you have a partner

More importantly, by claiming Pension Credit you could be entitled to other financial support, such as housing benefit, a reduction in council tax, or help with heating costs through the Warm Home Discount Scheme.

Find out if you’re claiming all you’re entitled to by using our free benefit calculator.