The retirement risk most people never plan for

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We all assume we’ll be able to decide when we retire. But, increasingly, that assumption is looking shaky.

Almost 900,000 people aged 50–64 in the UK are not in work but would like to be, according to government figures.¹ Poor health and caring responsibilities are among the reasons keeping people out of the workforce, while others have been made redundant or are struggling to find suitable roles.

For some, this means an early retirement they hadn't budgeted for and cannot afford. For others, the impact is less dramatic but still financially significant: a step down in salary or seniority, or part-time work when they would prefer to be working full-time.

So, what is causing people to fall out of work early? What could it mean for your retirement? And what can you do to protect yourself?

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How well does the UK support longer working lives?

To understand this challenge, Fidelity created the Longer Working Lives Index, comparing how well the G7 countries support people aged 55 and over to remain in work.

For each country, we tried to answer four key questions about people aged 55 and over:

• Can they work? This looks at whether they’re healthy enough to work, whether they have caring responsibilities that make it hard to work, and whether they have enough flexibility in their jobs to keep working.
• Do they want to work? This looks at the reasons people give for considering working for longer, how confident they feel about their retirement plans, and their job satisfaction compared to younger workers.
• Are they working? This looks at what proportion of 55–64-year-olds are in work, how their unemployment rate compares with 25–54-year-olds, and how likely unemployed older workers are to experience long-term unemployment.
• Are they in high-quality, rewarding work? This looks at how their earnings compare to younger workers, whether they participate in training as much as younger workers, and how many of them want to work full-time but can only find part-time work.

The full methodology can be found in our report.

The UK ranked last overall in our index, although that doesn't necessarily mean outcomes for experienced workers in the UK are poor across the board.

What pulled down the UK's score?

The underlying data highlight several areas where the UK has room for improvement:

• Pay: Full-time UK workers aged 55–64 earn around 2% less than those aged 25–54. The UK is one of only two G7 countries where older workers earn less than the younger comparison group.
• Retirement confidence: Almost a third (30%) of UK over-55s describe their retirement planning as poor, compared with 12% in the US and 13% in Canada.
• Working through financial necessity: Among UK over-55s considering working beyond retirement age, 37% say they would do so because they need the income to get by in retirement. This was the second highest proportion in the G7.
• Healthy life expectancy: At age 60, someone in the UK can expect around 17.5 further years of healthy life, compared with just over 20 years in Japan. Poor health can be a significant barrier to remaining in work later in life.
• Training: UK workers aged 55–64 were much less likely than younger workers to be participating in job-related training (43% compared with approximately 57% of 25–54-year-olds).

What could this mean for your retirement?

Most people consider a whole host of risks when building their retirement plan, including inflation shocks, stock market crashes, and bereavement. Few consider the risk that they won’t be able to work for as long as they want to.

Yet the financial consequences can be significant. That's because people who fall out of the workforce early aren't just losing years of salary: they're potentially losing years of pension contributions and investment growth while having to start drawing on their savings much earlier.

What can you do if your career doesn't go to plan?

The good news is that you don't need to know exactly what the future holds to prepare for it.

1. Stress-test your retirement plan

Don't assume you'll continue earning your current salary until your planned retirement date. Model what might happen if you stopped work five or ten years earlier, your earnings fell, or you needed to reduce your hours. Finding weaknesses while you're still earning gives you more time to address them.

• Try our retirement planning calculators

2. Build financial resilience early

Retirement planning should start long before retirement itself. Building an emergency fund, engaging with your pension, increasing contributions where affordable, and maintaining some accessible savings outside your pension can all give you more options if your circumstances change.

3. Don't assume losing your job means retiring completely

If returning to the same role or salary isn't possible, part-time work, consulting, self-employment or a lower-paid role could still make a significant difference. Continued earnings can reduce how much you need to withdraw from your savings and give your investments longer to grow.

4. Invest in your employability too

Your career resilience matters alongside your financial resilience. Developing your skills, maintaining professional networks and thinking about where else your experience could be valuable can give you more options if your career takes an unexpected turn.

The government’s Midlife MOT is another useful starting point, bringing together free resources to help you take stock of your work, skills, finances and wellbeing and plan for later life.

• Read: The overlooked retirement asset: your ability to keep earning

Ultimately, the aim isn't to predict every possible setback. It's to build a financial and career plan with enough flexibility to cope when life doesn't follow the path you expected.

If you're unsure whether your retirement plan could withstand an unexpected change in circumstances, retirement planning tools can help you explore different scenarios. If you need more personalised help, you could also consider seeking financial advice.

• Looking for personalised financial advice? Our advisory service can help you plan for your next step.
• More on the Fidelity Self-Invested Personal Pension (SIPP)

Got a burning question you want to ask? Why not drop us a line. Click here to ask your question.

• Read: The tax benefits of a SIPP
• Read: Which 50-somethings must wait longer for their pension?
• Read: How to trace old pensions

Source:

¹ Gov.uk, 30 September 2026