Thousands of over-65s turn to self-employment to boost retirement savings

Over-65s are increasingly turning to self-employment to help boost retirement savings, new research shows.

According to iSIPP, a pension provider, analysis of the latest Government data reveals a 20 percent surge in the count of full-time and part-time self-employed individuals aged 65 and above. The figures rose from almost 435,000 to over 523,000 in just three months.

The data shows the number of over-65s working as employees or self-employed hit a record high of 1.468 million in June 2022, with the self-employed accounting for around 35 percent of the total number of those working at 65 and over.

The number of over-65s in the workplace previously peaked in the first quarter of 2020 at just over 1.4 million.

iSIPP found self-employed over-65s accounted for around 12 percent of the total 4.24 million self-employed workers in the UK as a whole, which could be partly driven by the need to boost their retirement income.

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Hrishi Kulkarni, managing director of iSIPP, said: “Working past the traditional state pension age is becoming more popular and that applies just as much to self-employment as it does to employment.”

However, Mr Kulkarni added: “Working past 65 can make a major difference to retirement income as it enables investors to increase their future retirement income while also potentially leaving their fund invested for longer.

“They may also have built up retirement savings from previous employment and can benefit from consolidating their funds into one potentially improving returns and reducing fees while they plan for stopping work.”

According to iSIPP, those working over 65 are most likely to be found in service sectors including education, accommodation, and food services as well as the arts, entertainment, and recreation.

Wider research by later-life lending specialist Senior Capital found almost one in five pensioners (18 percent) across the UK will find themselves on the poverty line due to not having enough money in their pension funds. This comes despite the group having “trillions of pounds” stored in housing wealth.

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Due to the surge in house prices over the last 50 years, thousands of pensioners now find themselves in a situation of having a significant amount of capital wealth.

While average house prices stood at a mere £4,975 in the early 1970s, the latest figures released by the Office for National Statistics (ONS) in July show the prices to have skyrocketed to £290,000.

Research from property platform Savills found that UK pensioners now hold a record £2.6trillion in housing wealth. Yet with Senior Capital’s study finding a staggering 13 percent of over 65s having to delay their retirement due to having insufficient funds in their pension pot, today’s generation of pensioners are the most “financially vulnerable yet asset rich” in recent history.

Rudy Khaitan, managing partner of Senior Capital commented: “There is a growing need for new products that offer greater flexibility and choice, particularly in the relatively underserved later-life lending market.

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“For pensioners or anyone planning for their retirement, Loan To Value (LTV) is a critical component when assessing your quality of life during your later years, so it’s vital to investigate a multitude of options that can help ease your financial obligations, as remortgaging may not always be the right option.

“The right equity release mortgage product, particularly those that offer the greatest flexibility through limited prepayment penalties, can be the better option than a more traditional mortgage when you want to unlock the value in your home without taking on additional monthly repayments.

“It allows homeowners to access the equity built up in their property, providing a tax-free lump sum to supplement regular income, whilst still retaining ownership and the right to live in their home for life or until they move into long-term care.

“This can be particularly advantageous for those who are retired or have limited income, as it offers financial flexibility and stability without the burden of servicing higher mortgage repayments.”

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