Two in five 55 to 66-year-olds have retired early since the start of the pandemic, according to new research.
One in three have retired completely while one in ten have semi-retired.
Most (80%) say they have no regrets in quitting work early.
The research from Canada Life reveals that more than two in five UK adults aged 55-66 years old have opted to leave the workforce and retire since the beginning of the pandemic in March 2020.
Canada Life says this “acceleration” in plans could have a significant impact on a generation of pension savers. Analysis from Canada Life reveals that accessing pensions before state pension age would, on average, reduce a pension pot by 59%.
The financial provider says that someone from age 20 till age 55, earning £25,000, could have built a pension pot of around £117,468 at a contribution rate of 8%. However, if they continued to save until state pension age of 67 this pension would have grown to £186,262, or 59% more, due to interest compounding.
According to the research, 32% have retired completely and 11% have semi-retired. A further 16% have not yet retired but have reduced their working hours.
Looking at the motivation behind retiring early, semi-retiring or reducing working hours, 23% of pension savers were looking to find a better work/life balance, while 21% said their job was not worth the stress.
Other key factors behind the decision to retire early included:
- Ill health or long-term health conditions – 19%
- No longer needed to work for financial support – 19%
- A greater desire to spend more time with family and friends – 18%
- Wanting a change in lifestyle – 15%
- The impact the job was having on mental health – 13%
Of those who have taken a form of early retirement or reduced working hours, 35% are using savings and investments to supplement their income, and 20% have taken a lump sum from their pension. This is followed by using the funds from an inheritance (9%), while less than one in 10 (8%) say they have a second income stream from a side hustle
Andrew Tully, technical director at Canada Life, said: “The drastic impact that the Covid-19 pandemic has had on everyone’s lives has played a part in shifting individual mindsets, making people reflect on and prioritise what truly matters to them.
“It’s good that people feel positive about their decision to retire early but the cost of living crunch will squeeze the finances of many, so we urge people to take stock of their finances before making any snap decisions. For the third of people who tell us they have fully retired, not only will those pension savings need to last for longer, but the pot sizes will be significantly smaller. Hopefully those who have fully exited the workforce have sufficient savings to see them through retirement.”
• Survey conducted for Canada Life by Opinium among 616 UK adults between 10-16 May 2022.
