When most people leave their workplace after decades of hard work, most dream of their retirement plans and have the pension funds ready to go to sustain a comfortable lifestyle. Very few imagine they will return to the workforce again.

However, the cost-of-living crisis is forcing many to revisit their retirement plans. Paragon research found one in 10 retirees had returned to work or were thinking of doing so to help supplement their retirement income.

Meanwhile, Office for National Statistics (ONS) released record figures of employment amongst those over the age of 65. In the second quarter of the year, 1.5 million individuals over the age of 65 were in work. This took the employment rate of the age group to 11.9%, which is a 174,000 jump from the first quarter of the year.

The research from ONS suggests that many who retired during the Covid-19 pandemic are now returning to work because of the current climate and what they originally thought was sufficient funding for their retirement is no longer in line with the rate and pace of inflation.

Retirement financial challenges

There are many factors to consider with retirees being influenced to go back to work to cope with the current economy and to maintain their lifestyle given fixed retirement incomes. These include:

Cost of living

The increasing pressure of the cost of living is the main factor for retirees returning to work. Prices of goods are rising at their fastest rate in 40 years and the inflation rate reached a record high of 10.1% in the summer, with most economists predicting further increases.

The rising prices in energy, fuel and food are the main drivers for the increased expenditure many are facing for everyday living, although costs are increasing in most areas of life.

Suspension of Triple Lock State Pension

In line with Consumer Price Index (CPI) inflation figures in September 2021, which stood at 7.8%, the UK Government announced a temporary suspension on the state pension triple lock.

The triple lock rule ensures that the state pension increases in line with the highest figure of inflation, measured by CPI. The decision to bring in the suspension was due to the impact on the economy after the Covid-19 pandemic.

When the state pension increase was supposed to come in April this year it meant pensioners were £453 poorer and 12 million citizens were denied an increase that was in line with earnings growth.

Providing financial support to families

Some Britons are turning to the bank of mum and dad, or even grandparents, as we discovered in our research.

Two in five savers are supporting family members because of the cost-of-living crisis, with retirees more likely to do so. Nearly half of pensioners aged 70-74 are mostly likely to have helped family, with 29% having provided support to their children and 11% to their grandchildren – 7% supporting other family members. Meanwhile, 43% of those aged 75-79 have supported family members, with 46% of those 80+ also doing so – compared with just 24% of those aged 18-34, and 21% of 35-54 year olds.

Providing this support to family members, and if it’s consistent financial help, will impact retirees’ expenditure significantly.

Unretirement opportunities

It’s not only push factors that attract retirees to return to work, there are many pull elements as well. Many find retirement dull and miss the stimulation of work and interacting with people – the Institute for Employment Studies, a consultancy, said that about a quarter of those who retired typically returned to work within five years because they did not enjoy retirement.

Opportunities are also growing as the UK is at near full employment and companies struggle to recruit. Employers have found that unretires are more attracted to contract work and the rising wages. In sectors where there has been a shortage of workers, businesses have been expanding their recruitment pool.

Companies such as McDonald’s are now actively hiring from the older generation, so over-65s who are seeking work to help ends meet have a better opportunity in finding employment than in previous years.

But companies may need to be prepared to train returning retirees. Chris Brooks, head of policy at Age UK, told The Times that the government should provide more training for those who wanted to get back into work.

“It’s important to make sure that jobs are of really good quality and that’s how we are going to get people back into work,” he said. “People consistently say flexible working is the main thing they look for, so hopefully it’s an opportunity for employers to think about how they can make jobs that are flexible enough.”