Almost half of Gen Z said they would move to part time work once they reach retirement age rather than stopping work altogether.
Research by Standard Life, part of the Phoenix Group, also found 22 per cent of Gen Z would move to be self-employed and set up their own business rather than stop working.
This is in contrast to 76 per cent of current retirees who stopped working entirely when they began their retirement rather than phasing into it.
Only 17 per cent moved to part time work and just 3 per cent set up their own business before fully retiring.
Dean Butler, managing director for retail at Standard Life, said: “Younger generations are looking at retirement in a very different way and see it as more of a phased run-in to eventually stopping work.
“While their attitudes may change over time, this pattern makes a lot of sense given longer lives and changes in working habits. It does of course come with its own challenges and relies both on people finding the right employment opportunities and being in good enough health to take advantage of them.”
Standard Life analysis has shown part-time work post retirement can actually provide a significant uplift to a pension pot.
For example, someone that began working on a salary of £25,000 per year and paid the minimum monthly auto-enrolment contributions (5 per cent employee, 3 per cent employer) from the age of 22, could have a total retirement fund of £434,000 by the age of 66.
However, someone that worked part time for three days a week for three years beyond retirement age could find themselves £71,000 better off in retirement assuming they leave their pension untouched, according to Standard Life.
It also said those in a position to continue working part time for longer beyond retirement age have the potential to amass a larger retirement fund.
Butler said: “As the figures show, if you’re able to continue working and not touch your pension for a number of years the effects of further contributions and compound investment growth can really add up.
“It’s relatively common now for people to access other forms of savings such as Isas before touching their pensions and while that won’t be practical for everyone, this tops up as people phase into retirement could really boost their pensions.”
alina.khan@ft.com
