Almost one in 10 (9 per cent) retirees aged over 55 have unretired or are actively looking for work, due to financial pressures, a lack of pension provision, or a desire for social connection, according to research from Standard Life.

Standard Life’s Retirement Voice report revealed that 7 per cent of retirees over age 55 have already gone back into work, while 2 per cent are actively looking for employment, and 6 per cent are considering doing so.

The research found that income-related factors were a big reason for retirees aged over 55 unretiring, with 34 per cent of retirees finding their living costs have increased.

Meanwhile, 27 per cent said their pension is not providing enough income to live on and 43 per cent wanted to earn more money so they can treat themselves more in retirement.

In addition to this, some retirees have gone back to work for social reasons as 38 per cent said they felt bored and 20 per cent felt lonely.

Given that many retirees are returning to work because of their finances, Standard Life suggested that gradually easing into retirement by winding down work could provide an alternative to the “cliff-edge” retirement model while improving finances by adding a “significant” amount to their overall pension pot value.

The firm offered the example of that if someone 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, they could have a total retirement fund of £193,000 by the age of 66. This is adjusted for 2 per cent inflation a year.

However, it said that someone who worked three days a week from the age of 66 to 70 could add £27,000 to their pension pot.

Meanwhile, working one day a week for a few years after reaching retirement age could add as much as £21,000 to a retirement fund, £18,000 from fund growth due to delaying starting to access pension savings from 66 to 70, and £3,000 due to the additional contributions of working one day a week.

Standard Life retirement savings director, Mike Ambery, said that money was not the only reason people re-enter the workforce after retiring, but said it seems to be a “big factor”.

He said that recent retirees could not have foreseen the cost-of-living issues that have “squeezed” retirement incomes, with many now being “forced” to rethink their plans and return to work.

“Fewer people currently saving for retirement have gold-plated employer pensions, guaranteeing a set income in retirement, with more of us having to consciously engage and manage our own arrangements,” he continued.

“It’s therefore vital for today’s workers to take an interest in their pension throughout their careers.

“Being aware of how much you’re saving now and if it’s likely to grow to be enough for you in retirement is just one simple step that can help people prepare for their desired retirement and take steps to better prepare their finances for when they eventually stop working.

“It might be worth those thinking about how to take their pension money and make it last, considering guaranteeing all or part of their retirement income via an annuity - particularly as annuity rates have risen over the last couple of years.

“This could be a good way of ensuring that the basics are covered.”

He suggested that, in the future, it is likely that more people would “shun the traditional cliff edge retirement” and instead gradually reduce working hours or take on part-time work.

Adding to this, Phoenix Insights director, Catherine Foot, said that returning to work can be “hugely beneficial” for over 50s when it comes to earning, saving, and the sense of purpose it brings.

She explained that while some savers have enough finances to retire early out of choice, many stop working in their 50s and 60s due to other reasons such as caring responsibilities or ill health, but plan to return as soon as they are able to.

Phoenix Insights research showed that the average total wealth for a 50-64-year-old out of work due to ill health is £57,000, less than 5 per cent the wealth of those who retire early out of choice (£1.24m).

However, Foot emphasised that the over-50s face “significant” barriers to re-entry.

“This is primarily due to a lack of opportunities and insufficient provision of good quality flexible work that people working later in life desire,” she added.

“Being out of work before state pension age is a major driver of pre-retirement poverty, so it’s critical the government and employers to better support this group to remain in employment.

“Providing access to flexible work is one of the most important factors to enabling this.”

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