What will the retirement of the future look like?

Predictions about the future are not easy. I’m still waiting for my jet pack and weekend staycations to Mars. And predictions about the future of work, including those by the shrewdest of minds, can be made to look silly by the passage of time.  Economist J M Keynes predicted that by the end of this decade, we’d all be working just 15 hours a week. Feels pretty far off at the moment.  
 
To kick off this year, we’ve already had some very eye-catching predictions for what future retirement might look like. According to the International Longevity Centre, the state pension age might need to rise to 71 by 2050 in order to maintain a balanced proportion of retired and working age populations. Meanwhile some futurists have been predicting that retirement as we currently know it will become obsolete by 2040 and that many of us will just continue working into older age but potentially on reduced hours.

We’ve all had to get used to the idea over recent years that our working lives will probably be longer than we first anticipated. But can this trend continue upwards? 

What we can safely predict is that retirement is changing – but not disappearing. The retirement cliff edge is very much a thing of the past. There used to be a big spike in people retiring when they reached state pension age, but this has flattened considerably over the last decade.  
 
The number of people who keep working after 65 has risen by nearly a million since the millennium.

One in nine people now keep working beyond their 65th birthday, compared to one in 20 in 2000. However, this still means that the vast majority of people stop working before they reach state pension age, with some stopping many years before. The way people are able to navigate this transition into retirement is heavily dependent on how wealthy and healthy they are in middle age. 
  
Higher earners who are considering stopping work before retirement age are more likely to talk about wanting a better work/life balance. Lower earners on the other hand are more likely to refer to the challenges of their physical or mental health. Those higher earners are also more likely to have access to the kind of high-quality, well-paid, flexible work, like consultancy, that futurists have identified as options for older workers in the future.  
 
This kind of work won’t be an option for every older worker. Well-paid, hyper-flexible work that can be continued well into later life is largely available to those who have spent their working lives in higher-paid professions.  
 
That is not to say there are not people working across a huge variety of sectors, including retail, hospitality and construction, well into their 70s and beyond. But they are a minority, and are likely to remain the minority for the foreseeable future. 

There is a major challenge here. The people who are leaving work early due to ill-health, also have the least amount of wealth to support them. People aged between 50-64-years-old who leave work due to ill-health have a median wealth that is 20 times lower than those who choose to retire. This is a major contributor to the fact that the highest rate of adult poverty is among 60-65-year-olds.  
 
These are people who are unable to access work, and also don’t have the private means to support themselves. The poorer you are, the younger you are likely to find yourself in this position. Healthy life expectancy is just 53 in the most deprived parts of the country, compared to 71 in the least deprived.  
 
In the future, there will still be many people who physically won’t be able to work anymore in their 50s and 60s. We will need a better safety net to support them as their numbers increase with our growing ageing population. 

And at the same time, there are even more people in younger generations who are approaching retirement in a precarious financial position than there have been before. Recent research found that almost one in five people of working age in the private sector are not saving into a pension at all. The possibility of successfully raising the state pension age to 71 within three decades, without plunging hundreds of thousands of people into poverty in their 60s, feels a long way off. 

If we are serious about expecting people to work that long, we need to make it much easier to get and keep a job when you’re in your 60s. Currently, employers’ recruitment, retention and training is too skewed against older workers. Too many older workers find themselves fighting to get opportunities to progress and contribute, despite having so much more to offer. 

Struggling on financially until 66 is proving challenging for many now. Adding another five years would be too much for many to bear. If we are going to reach a future where working far beyond the retirement age becomes the norm, as some futurists suggest, we need much more high-quality, accessible, flexible work in our economy. That means more well-paid part-time jobs, more access to career progression in our 50s and 60s, and more access to adjustments in the workplace.

Without that change, the future will just have increasing numbers of older workers barely scraping by in the latter parts of their working lives. So we need more employers to recognise the value of older workers, and actively work to remove age-bias from their recruitment processes. And we need to celebrate multi-generational work cultures that give everyone the chance to contribute and grow.  

Employers who want to learn and do more should consider signing our Age-friendly Employer Pledge to join our 300-strong network of employers who are committed to improving the recruitment, retention and development of older workers.

In the future, the final years of work and retirement should not mean wealth and freedom for a rich elite but increased hardship and poverty for the poorer majority.  
 
We should hope to do much better in the future.