Experiences of the past and potential future scenarios

The latest research reveals a significant disparity in perceptions regarding retirement experiences of the past and potential future scenarios. Over the past 50 years, a ‘hard stop’ or ‘transitional’ retirement has been the predominant way people have transitioned into retirement. A ‘hard stop’ refers to an abrupt end to working life, while a ‘transitional’ retirement involves gradually reducing working hours.

However, the ‘hard stop’ retirement is anticipated to diminish considerably in the future. Only 15% of UK adults believe it will represent most people’s experience in the next 10-25 years, indicating a paradigm shift in how future generations envision their retirement.

Changing retirement trends
The most notable shift between past and future retirement perceptions is a substantial increase in individuals never fully retiring because they want or need to continue working. Currently, 41% of UK adults expect this to be the norm in the next 10-25 years, a significant rise from 13% in the past[1]. This change can be attributed to several factors, including increased life expectancy, the rising cost of living and the desire to stay mentally and physically active.

Research focusing on hopes versus expectations of transitioning to retirement reveals that 44% hope for a ‘hard stop’, 47% hope for a transition period and just 9% hope to keep working. However, the expectations paint a different picture.

Planning for retirement
Only 30% expect a ‘hard stop’, 46% anticipate a transition period and 24% foresee continuing to work. Among those yet to retire who hope for a hard stop, only 52% realistically expect to achieve this, and one in five (19%) believe they will need to keep working. This divergence between hope and reality underscores the complexity of planning for retirement in today’s economic climate.

The concept of a ‘hard stop’ retirement has been replaced mainly by those looking to gradually reduce their working hours, combining part-time work with pensions to supplement their income. This approach allows retirees to maintain a sense of purpose and social connections while easing into retirement. While gradual transition remains popular, our research indicates a significant shift, with more people expecting to work indefinitely. This trend is expected to be driven by financial necessity and personal preference.

Flexible, part-time and remote work
Technological advancements and the rise of the gig economy also play a role, providing opportunities for flexible, part-time and remote work that can be tailor-made to suit the needs of older workers. For instance, consulting roles, freelance opportunities and online businesses allow individuals to leverage their experience and skills without the constraints of traditional full-time employment.

Flexible work environments and savings strategies will need to support the evolving approach to retirement in the future. Many employers will need to consider adapting to flexible working hours, remote work options and phased retirement plans that align with the changing needs of their workforce. Policies must also adapt to allow individuals who wish or need to remain employed longer to do so comfortably. For example, extending the age limits for pension contributions and providing incentives for lifelong learning can help older workers remain competitive in the job market.

Boost retirement savings
Additionally, a concerted effort must be made to help people save more effectively for retirement. Financial education and planning services should be made more accessible to ensure individuals can make informed decisions about their retirement savings.
Millions of adults are currently off track with their savings and might have to delay retirement plans as a result. Addressing this issue will require strategic policy changes to boost retirement savings and provide adequate support for a flexible workforce. For example, increasing employer contributions to workplace pensions and offering tax advantages for personal savings plans could incentivise higher savings rates.

Source data:
[1] Phoenix Insights research conducted by Message House, carried out in January 2024 among 1,502 UK adults. Weighted to be nationally representative.

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