One might imagine that lower paid workers might spend less time in retirement than their better-paid peers, due in large part to the financial challenges imposed by living without an income.  Alas, new research from UCL suggests the reverse might actually be true, with lower-paid workers in the UK spending three times longer in retirement than their professional counterparts.  This isn’t necessarily positive however, as they are also more likely to suffer from ill health in retirement.

The researchers explored the length of time between stopping work and dying for people in England and Wales that were born before 1951.  The data revealed that those in ‘unskilled’ occupations tended to spend longest in retirement, with professional workers having the shortest retirement.

The authors reason that this is likely to be due to the fact that unskilled workers may often be forced to retire earlier, either by ill health or that their skills are no longer in demand.  This corresponds to a generally shorter life expectancy, with lower skilled people typically living four years less after 65 than their peers.

“Our study shows a uniform state pension age affects the poorest the most, because on average they must wait longer before qualifying for a pension,” the researchers say.  “This is despite the fact that they are likely to have started work younger and thus paid contributions for just as many years as their better-off peers.”

Health premium

The data found that women in unskilled work with poor health tended to live for 26 years after thy retired, versus just 21 years for men.  Professional mean and women tend to spend just 21 years in retirement.  It’s a level of nuance that the authors believe is not reflected in retirement policies.

“We believe a pension age that is two years earlier may be better for individuals who work in manual occupations, given that they are often forced to leave work early,” they explain.

The data revealed that the average retirement age for an unskilled worker was 58 for women and 59 for men.  For professional workers however, retirement was 60 for women and 62 for men.  Respondents were also asked for their health in the past year, in addition to their occupational status.

The researchers believe their analysis is vital, as for the purposes of the study, the state pension kicked in when men were 65 and women 60, which is a few years after many actually stopped working.  With the retirement age set to increase to 67 for both genders by 2028, it’s a situation that could be exacerbated in the coming years.