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Generation X will lead flexi-retirement revolution, concludes new Retirement Prospects Report for 40-55 year olds

Dunstan Thomas study finds only 5% of Gen Xers likely to enjoy a ‘conventional’ retirement

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Exploring the retirement options of Generation X

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A new nine month study into the pensions and savings levels and retirement expectations of Generation X, concludes that a revolution in the way we think about retirement is already underway. The 53 page report entitled ‘Exploring the Retirement Prospects of Generation X’ by pensions specialist fintech Dunstan Thomas, finds that the average level of savings so far amassed by UK residents aged 40-55 today, means that only five per cent1 of Gen Xers are on track to be able to fully retire in their mid-60s.

Dunstan Thomas argues that something deeper is going on here: it’s not just out of economic necessity that Gen Xers will want to work on into their 70s and even early 80s but increasingly they will be doing so for their own wellbeing and as a lifestyle choice. Quite simply nearly all their peers will be working on and therefore retiring fully in your 60s will increasingly feel like a lonely, unfulfilling, and overly-long proposition as many more of us will be living deep into our 90s.

The average pension of Generation X is worth £159,837 and they are making pension contributions of just £200.60 per month. The average value of non-pension investments of this age group (amongst the three quarters of Gen Xers that have any non-pensions savings) is £71,591. In some parts of Britain more than a third of Gen Xers have no savings whatsoever.

Adrian Boulding, Director of Retirement Strategy at Dunstan Thomas commented: “The reality is that with average pensions and other savings levels for Generation X standing at just £231,428 in total, and current monthly pension contribution averages being so low, 95 per cent of Generation X will view the retirement their parents enjoyed as a historical anachronism they simply cannot afford. We think many Generation Xers will choose to go on working deep into their 70s and beyond. But it won’t just be about of economic necessity. It will become a lifestyle choice!”

Exploring the retirement options of Generation X

Why? The world of work is changing. The coronavirus pandemic has accelerated more flexible working patterns which also favour older workers who will want to work on, perhaps working less hours and partially from home. What this study shows is that Generation X will be the first generation to truly redefine the nature and timing of retirement by embracing working well beyond State Pension age. They will do so for money, for social company and for the collective sense of still contributing positively to society.

As part of the study, Dunstan Thomas researchers went out onto the streets of London, Liverpool, and Bristol to talk face to face with Generation Xers about their retirement expectations.

Adrian Boulding explains: “The people we met were not expressing feelings of injustice that they would be working on, part-time, into what we used to call old-age. I congratulate them for rejecting the vacuous, hedonistic pleasures of full retirement and welcome their enthusiasm to continue to make a positive contribution to society by deploying their skills and attributes through paid employment.

“Gen Xers are going to forge a new normal for retirement, with 40 per cent of them already telling us that they will never fully retire. The old ways of giving up work while still perfectly fit and able will become the preserve of a shrinking wealthy elite.

“It’s high time Government and policy-makers alike woke up to the coming reality of Generation X’s retirement and built planning tools and tax incentives that cater properly for a prolonged period of dovetailing part-time employment with withdrawal of some pension income. Projections that assume the whole pension pot is turned into an income at age 65 are looking increasingly irrelevant and the Money Purchase Annual Allowance will become a source of great frustration for those seeking to blend part-time work with part-time retirement.”


The study also uncovered a surprising inverse correlation between happiness and savings levels. Put simply, this meant that people with less savings often felt happier with their financial lot than those in better shape financially:

“This finding supports our belief that long term savings levels don’t necessarily bring a feeling of wellbeing and happiness. There are intangible factors at work here like community spirit, feeling you’re contributing and are being ‘useful’. These issues are more important to a great many people than how much they’ve stacked in their bank account or savings plan. Working on into your late 60s and 70s need not be miserable – indeed as more and more of your peers are doing it – we predict it will be welcomed as the ‘new normal’ for Gen Xers,”

Adrian Boulding added.

The report also details a kaleidoscope of factors which have predicated against consistent and adequate levels of retirement saving by Generation Xers to date, putting a conventional retirement out of reach for most of them:

  1. The decline of the more generous Defined Benefit ‘final salary’ based pensions: so that just over a quarter (27 per cent) of 40-55 year olds are in line for a DB pension at retirement now.

  2. More unstable employment patterns: the report documents the high numbers of Gen Xers who have been exposed to compulsory or voluntary redundancies – 42 per cent have been made compulsorily redundant while 21 per cent have taken voluntary redundancy at least once and those made compulsorily redundant saw their pension savings levels suppressed by 40 per cent.

  3. The Great Recession: the timing of the Great Recession from 2008-2013 hit Gen Xers particularly hard because of their age at the time. They were 28 to 43 when it started. The study found that nine per cent of Gen Xers saw ‘a major impact with retirement savings going on hold for all or nearly all’ of the infamous five-year downturn.

    One in seven (14 per cent) self-employed Gen Xers froze all retirement savings during most or all that period. 15 per cent of Gen Xers with a monthly household income of £4,501-£5,000 today, recorded halting pension contributions for most or all of this period, confirming what many reported at the time; that the Great Recession was the first downturn that hit middle and high-income family incomes exponentially. Dunstan Thomas predicts that COVID-19 will have a similarly negative impact on Gen Xers savings:

    “The danger is that when people stop contributing to pensions they break the habit and it’s harder to restart. In our video interviews of Gen Xers around the country, we uncovered some Gen Xers who had not managed to restart saving into their pension having stopped doing so back in 2008/9 more than 10 years ago,”

    Adrian Boulding, Director of Retirement Strategy at Dunstan Thomas explained.

  4. The disappearance of financial advice for most: Progressive moves to professionalise financial advice over the last decade, most recently leading to the ban on contingent charging for transfer advice, meant that the financial advice which Gen Xers often had early on in their working lives (via Direct Sales Force agents and high street banks) melted away, leaving nine out of 10 Gen Xers without access to professional advice.

1 The October 2019-published study by the Institute and Faculty of Actuaries (IFoA), building on the Pensions and Lifetime Savings Association’s (PLSA) Retirement Living Standards research, calculated that those on average incomes need to set aside £799 per month to afford a ‘moderate retirement lifestyle’. The Dunstan Thomas study found that only five per cent of all Gen Xers are saving more than £750 per month for retirement.

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