By Max Clarke
More than three out of four over-50s made redundant in the past three years took a pay cut to get back into full-time employment, with 45% saying they had to take a “considerably lower” salary.
Around 51% have to take a completely different role or work in a new sector to get back into employment, according to the findings of a nationwide study by equity release adviser, Key Retirement Solutions.
Younger workers are much less likely to have to take a pay cut — just 50% of 21-30-year-olds made redundant took a pay cut rising to 63% for the 41-50 age group.
“People in their 50s should ideally be gearing up for the final push on securing their finances in retirement so being made redundant is a particularly tough blow,” says Dean Mirfin, Group Director at Key Retirement Solutions.
And to some extent those taking pay cuts are the lucky ones — 46% over-50s made redundant during the past three years have yet to find a job. The study shows however that over-50s take on average 4.7 months to get back into work compared with 6.6 months for 41-50-year-olds.
Key Retirement Solutions launched the research after seeing a growing trend of 50-plus customers inquiring about equity release after suffering redundancy. In the first quarter of 2011 over 1 in 4 equity release plans were taken out before age 65, almost as many as the 65-69 age group. The fact that equity release plans are available from age 55 may prove to be a lifeline for many facing bleak prospects.
The effects of redundancy may well be forcing many to rely on borrowing to offset the effects, and for many that debt may well be carried through into retirement. It has seen a rise in debts among pensioners with the average customer taking out equity release owing £25,418 last year.
“We have seen a growing trend in customers at younger ages applying for equity release in order to supplement incomes at a time when many can ill afford any drop in income let alone the dramatic effects of redundancy.
“Redundancy is tough at any age but the younger you are the longer you have to bounce back. We’d urge anyone made redundant in their 50s to take a careful look at their finances and to get advice.”
The research shows 51% of over-50s are concerned about the risk of redundancy in the next 12 months — roughly in line with the average across all ages of 53%.
Around 24% of 51 - 60-year-olds say they have been made redundant in the past three years — slightly ahead of the average across all age groups. Those aged 21-30-years-old are most likely to have suffered redundancy with 34% saying they have lost their job in the past three years.
Not all over-50s who lose their jobs have to take a pay cut to get back to work — a lucky 6% got a higher paid job while 7% got a job at the same salary as before.
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