Thousands of seasoned professionals dropped out of the workforce early during the pandemic, but far from enjoying an early retirement, new research now shows that nearly half of them have been forced into poverty.
In the U.K. 48% (390,000) of the roughly 812,500 50-70-year-olds who retired in 2020-21 are living in poverty, The Institute for Fiscal Studies (IFS) has revealed—meaning their annual income is below 60% of the average household.
“It is often assumed that older people who left the workforce during the pandemic were wealthy individuals retiring in comfort,” Xiaowei Xu, a senior research economist at IFS and author of the research, said.
“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.”
Most people weren’t retiring for a laid-back life
Damning reports blamed retired workers for contributing less in taxes but needing billions more in welfare support, causing a “vicious circle” for the country’s finances—all the while condemning their decision to drop out of the workforce early as a “lifestyle choice”.
But the IFS’s new research highlights the eye-opening reasons that forced older workers to toss in the towel on their careers.
The British economic think tank pointed to job losses during the early stages of the crisis, coupled with the additional health risks faced by older workers, as likely to have forced many people into early retirement.
The researchers found 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 ($77) and had lower levels of well-being than previous cohorts of people who had recently stopped working.
Their health was worse than those who had been out of the workforce for much longer. Meanwhile, pre-pandemic retired workers didn’t have to substantially change their food expenditure upon leaving the workforce.
Moreover, many quit without a state or private pension income to support them. So the researchers summarized that this suggests workers were forced to leave the workforce, as opposed to “retiring in comfort”.
In contrast, those who retired the year later during The Great Resignation, have enjoyed similar living standards and well-being to pre-pandemic retirees, suggesting that they were more likely to have left the workforce voluntarily and on more comfortable incomes.
They’re struggling but unable to rejoin the workforce
The size of Britain’s workforce in the wake of the pandemic has drastically staggered, largely because of long-term sickness and early retirement.
Now although some of this trend has been subsequently reversed as people are forced to return to work amid the cost of living crisis, the IFS warned that “older people who stop working often never re-enter the workforce”.
Yet, without the income of a pension income to support them, many of those pandemic retirees are witnessing their living standards and well-being being pushed down even further as the cost of living soars.
It’s why the ISF is calling on the Government to launch policies to help get this cohort of retired workers to rejoin the workforce and support packages for those who can’t.
“This research shows many older workers were swept out of work by the coronavirus pandemic rather than this being a positive choice,” Peter Matejic, chief analyst at the JRF, a charity working to solve UK poverty, stressed in response to the report.
