Some of the people who have decided to retire early in recent years are now returning to the workplace due to cost-of-living pressures, new research has revealed.

Leading workplace pension provider People’s Partnership1 and asset manager State Street Global Advisors2 have today released the latest New Choices, Big Decisions3 study, which shows that some early retirees have either been forced back into work after realising their savings weren’t enough or simply because they were bored of retirement. The latest instalment of the longitudinal study, which has followed the journey of a group of savers up to and into their retirement since 2016, focuses on those who have re-joined the workforce.

The study shows that these re-joiners tend to return to the jobs market either part time or on flexible hours in low-stress roles and prefer to work close to where they live. Although these older workers want the structure and a sense of value that work brings, their new jobs are often very different to their previous careers.

The Office for National Statistics (ONS) latest labour market figures4 show that the number of older people returning to the workforce remain above their post-pandemic low.

One of those who took part in the research, Josephine, originally retired early due to ill-health but returned to work once interest rates began to rise in 2022. She said: “You always think: well I’ve got a little bit of money put aside, and that’s okay. I’ll use that for a rainy day. But that rainy day came sooner than I thought. And it wasn’t for a holiday, it wasn’t for something pleasant. It was just to survive. I thought: ‘I can’t continue doing this otherwise I’m going get myself in a lot of trouble’. I didn’t want to take more from my pension as it wouldn’t last me very long.”

The New Choices, Big Decisions research also highlighted the importance of the State Pension to those with private retirement savings, with some of those who took part in the study admitting they had to appreciate its importance, having originally dismissed it as a ‘pittance’.

Phil Brown, director of policy at People’s Partnership, provider of The People’s Pension to more than 6.5 million people, said: “The fact that an increasing number of early retirees are returning to the workplace suggests that some have realised that their pension savings won’t stretch as far as they had hoped. It’s a reminder of how important retirement planning is and that so many savers need support when it comes to how they access their pension pot.

“The research also shows us how important the State Pension is to so many retirees, some of whom had previously assumed that it wouldn’t provide them with enough income. In reality, the State Pension makes up a significant proportion of retirement income for those with a private pension.”

Alistair Byrne, head of retirement strategy at State Street Global Advisors, commented: “This wave of research takes place in a very different economic environment, with a cost of living crisis created by high inflation and markedly higher interest rates forcing retirees to rethink their approach. The results reinforce our view that for many people, a guided retirement income product that provides flexible access to the pot in the early years of retirement, along with a stable, guaranteed-for-life income in the later years, will be a valuable approach.”

Previously published findings from the study revealed that retirees still aren’t considering the impact that inflation has on their pension savings. The report recommends that stress testing planning tools offered by financial service providers should provide a greater focus on inflation protection. It also says that pension providers should look to strengthen the information they provide on inflation in their customer information and education resources.