Thousands of over 60s choosing self employment ahead of retirement as state pension triple lock not enough
The total number of workers who are self-employed is around 4.3 million
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The number of people aged 60 and older who are self-employed has reached a record of almost one million as more people look for ways to supplement their state pension.
Older Britons are turning to self-employment as the cost-of-living crisis continues to bite.
Rest Less’s analysis found that while the number of self-employed workers in their 50s and older has grown since 2021, it is specifically those aged in their 60s who have set a new record high.
Stuart Lewis, chief executive of Rest Less, said: “With the state pension age soon to be 67 and set to go higher still, many people are choosing to work beyond the point of traditional retirement.
“For many, self-employment is a great option as it allows people to remain active and engaged in the community and workforce whilst also providing greater flexibility – leveraging their skills, experience and network to make an impact.
“The decision to go self-employed can be driven by wildly different sets of circumstances from people living comfortably and pursuing an entrepreneurial passion to those who are forced to generate an income and have not been able to find a permanent solution in the mainstream workforce."
The full state pension could rise by around £517 a year if wage growth remains at 4.5 per cent GETTYRest Less said its study found that there were 991,432 self-employed people aged 60 or over in 2023 – an increase of 33 per cent in a decade.
In 2023, 23 per cent of the UK’s self-employed workforce were aged 60 or over and 49 per cent were aged 50-plus.
Of the nearly one million self employed people aged over 60, 223,086 of them were aged over 70, the report added.
Lewis added: "The cost of living crisis of recent years has made it particularly challenging for those relying solely on their state pension and we’ve seen an increase in the number of people turning to self-employment to provide an additional income source and top up pensions whilst they still can."
Wage growth continues to outstrip inflation, so it’s highly likely that this will be the key factor used to uprate the state pension under the triple lock. The triple lock aims to increase the state pension every year by whichever is highest of CPI inflation, average wages or 2.5 per cent.
The latest figure for average wages including bonuses for the April to June 2024 period came in at 4.5 per cent.
If the figures were to remain the same next month, then the full new state pension get a boost of around £517 — taking it to around £12,019 per year from next April.
Such a rise will be welcomed by pensioners still emerging from the cost of living crisis. However, with many still reeling from the recent news that their winter fuel payment is to be taken away, it won’t be quite the boost that many hoped for.
Despite the state pension being the "backbone" of peoples' pension income, experts are warning the retirement benefit is not sufficient enough to live on for many who want a "moderate retirement".
As personal tax allowances remain frozen until 2028, this "stealth tax" is expected to hit more pensioners over the next four years.
Sarah Coles, the head of personal finance at Hargreaves Lansdown said: "The state pension is the backbone of people’s retirement income. But for a decent retirement income it’s important you supplement it with your own retirement savings, whether that’s through a workplace pension or Self invested Personal Pension (SIPP).
"The latest data from HL’s Savings and Resilience Barometer shows only 38 per cent of households are on track for a moderate retirement income. So, clearly there’s still more to do.
"Small actions like upping your contributions when you get a pay rise or new job is one way of boosting your contributions. You should also make sure you’re making the most of any contributions your employer is making."