Nearly half (47 per cent) of Gen Z plan to move to part-time work as they approach retirement, while nearly a quarter (22 per cent) think they’ll move to be self-employed or set up their own business, research from Standard Life has revealed.

The survey found that, currently, more than three quarters (76 per cent) of retirees stopped working entirely when they began their retirement rather than phasing into it, while 17 per cent moved to part time work, and 3 per cent set up their own business before fully retiring.

However, Standard Life said that the trend towards longer-lives and the move away from a job for life may well mean that many more savers end up working part-time in the run up to retirement.

And this could prove beneficial in retirement, as the analysis suggested that a phased approach and continued part-time work could “significantly” boost total pension pots.

For example, someone that began working on a salary of £25,000 per year and paid the minimum monthly auto-enrolment contributions from the age of 22, could have a total retirement fund of £434,000 by the age of 66.

In contrast, someone that worked part time for 3 days a week for 3 years beyond retirement age could find themselves £71,000 better off in retirement assuming they leave their pension untouched.

However, Standard Life managing director for retail, Dean Butler, acknowledged that a phased approach to retirement can also bring its own set of challenges, as it relies on people finding the right employment opportunities and remaining in good enough health.

He stated: “Younger generations are looking at retirement in a very different way and see it as more of a phased run-in to eventually stopping work. While their attitudes may change over time, this pattern makes a lot of sense given longer lives and changes in working habits.

“It does of course come with its own challenges and relies both on people finding the right employment opportunities and being in good enough health to take advantage of them.

"As the figures show, if you’re able to continue working and not touch your pension for a number of years the effects of further contributions and compound investment growth can really add up.

“It’s relatively common now for people to access other forms of savings such as ISAs before touching their pensions and while that won’t be practical for everyone, these tops up as people phase into retirement could really boost their pensions.”

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