Many older people who stopped work in pandemic are in poverty, not enjoying early retirement

7 July 2023, 06:55

Many 'early retirees' are in poverty
Many 'early retirees' are in poverty. Picture: Getty/Alamy

By Kit Heren

Nearly half of the people aged between 50 and 70 who left the workforce in the first year of the Covid019 pandemic are struggling with money, research shows.

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Some 48% of people who quit work in 2020-2021 were in 'relative poverty', which means their household income was below 60% of the median, according to the Institute for Fiscal Studies (IFS).

Millions of working age people in the UK are 'economically inactive', with the assumption often being that many older people stopped working during the pandemic because they were comfortable enough to retire and live off savings.

But the IFS research suggests that many older people who left work in the first year of the pandemic have had to cut their food expenditure by around £60 per week.

They also struggled more with their overall well-being and were less likely to receive a pension than those who had stopped working in previous years.

Read more: 'Britain needs you': Jeremy Hunt calls for early retirees to return to work amid plans to hike retirement age to 68

Read more: Over 50s could be exempt from income tax for up to a year under plans to tempt people back to work

This retired caller says: 'The UK is an ageist society.'

The report also warns that older people who stop working often never get another job, meaning these people may be struggling more in the cost-of-living crisis.

Xiaowei Xu, a senior research economist at IFS and an author of the research, said: "It is often assumed that older people who left the workforce during the pandemic were wealthy individuals retiring in comfort.

"Our analysis shows that those who left in the first year of the pandemic experienced a sharp rise in poverty, despite overall poverty rates falling that year, and also suffered large falls in well-being.

"Some of this group might well be amenable to coming back into the workforce with the right opportunities, and there are signs that some are returning already.

Many elderly people are living in poverty
Many elderly people are living in poverty. Picture: Getty

"If the Government wants to get this group back to work, the success of policies to support older workers, such as the mid-life MOT, will be critical."

Chancellor Jeremy Hunt has previously urged working-age people who retired during the pandemic to get back to work.

In a direct appeal to those that have retired early, the Chancellor said in January that "Britain needs you" as he spoke of the need to "fix" Britain's productivity problem.

Mr Hunt said: "Nor will we fix our productivity puzzle unless everyone who can participate does.

"So to those who retired early after the pandemic, or haven’t found the right role after furlough, I say – Britain needs you."

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