Workers in the UK aged 50 and older are considering adopting a phased retirement approach amid financial security concerns and expectations of longer working lives, research from WTW has found.

Its 2024 Global Benefits Attitudes Survey showed that nearly half (49 per cent) of workers aged 50 or older have either started phasing into retirement (17 per cent) or want to do so (32 per cent).

Most of these employees expressed a desire to transition into retirement over a long period of time.

For example, those who started phasing into retirement aged 56 expected to work for 10 more years, with similar results for workers who wanted to phase into retirement when they are older.

Three quarters (75 per cent) of workers who are currently phasing into retirement have reduced their work hours, while 31 per cent have reduced their job responsibilities.

More than two-thirds (68 per cent) cited financial security as a reason driving their decisions about how and when to retire, while 61 per cent mentioned health concerns and 56 per cent cited having more time for family, leisure and travel.

WTW’s research revealed that 39 per cent of workers under the age of 50 expected to work past 70, up from 27 per cent two years ago.

Furthermore, 79 per cent admitted they were not saving as much for retirement as they should be, and less than half (47 per cent) reported being on the right track to retirement.

“Phased retirement can be a win-win for both employees and employers,” commented WTW head of defined contribution consulting, Helen Holman.

“Working fewer hours even with reduced pay can help employees transition into retirement both financially and emotionally. At the same time, companies want to hang on to experienced employees and encourage them to pass on their wealth of knowledge to younger employees.

“Still, most employees think their employers can do a much better job of leveraging the skills of older workers.”

Less than a third (30 per cent) of respondents rated their employer as effective at using the skills and knowledge of older workers.

Meanwhile, 55 per cent of employees felt their employer-provided pension was more important than ever, with 70 per cent saying it was their primary way of saving for retirement.

More than four in 10 (41 per cent) cited their pension as an important reason to stay with their current employer.

“These findings show that employees are recognising they might need, or want, to re-think when and how they retire to balance all their needs in later life, including financial,” said Holman.

“Employees working later in life can be an opportunity for employers to retain valuable skills and experience but might also present a challenge.

“What’s clear is that employees still consider their employer’s pension scheme as their primary savings vehicle for retirement and more can be done to ensure better outcomes from these. Paying more into pensions will improve member outcomes but that clearly comes at a cost for both employees and employers.

“Whilst increasing costs might be challenging, some employers might prefer to invest in employees’ retirement provision now, rather than bear the cost of an aging workforce later.”

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