Delayed retirements set to reshape workforce planning for UK employers 

Only 14 per cent of UK employees are on track to retire when planned, raising concerns about the impact on workforce planning, costs and progression, according to new research by Flagstone. 

The study highlights a widening gap between when employees expect to retire and when they are financially able to do so. On average, workers would like to retire at 61, but current savings patterns suggest many may not reach this point until 83 – a 22-year difference. 

This shift is creating a new challenge for employers, as later retirements begin to affect payroll, succession planning and long-term business strategy. 

The findings come as the UK government revives the Pensions Commission, amid concerns that future retirees may face poorer financial outcomes than previous generations. Against this backdrop, delayed retirement is emerging as both a financial wellbeing issue and a structural workforce challenge. 

For employers, the impact is already becoming visible. As employees remain in work for longer, payroll costs can rise beyond forecast due to higher salaries and increased pension contributions linked to tenure. 

Labour market trends reflect this shift. In 2025, 71.6 per cent of people aged 50 to 64 were in employment, up from 57.2 per cent in 1995. As retirement timelines continue to extend, workforce models built on earlier exit assumptions may no longer hold. 

Succession planning is also affected. When senior employees delay retirement, progression opportunities for mid-level staff can slow, increasing the risk of disengagement and attrition among future leaders. 

The research also highlights significant variation across industries. No sector analysed is fully on track for retirement readiness, but some face a much wider gap than others. 

Workers in travel and transport are the furthest from their retirement goals, with just 4.7 per cent on track and an average delay of 28 years. Education and retail, catering and leisure sectors also show large gaps, with delays of around 25 years. 

In contrast, arts and culture, IT and telecoms and finance show relatively smaller – though still significant – gaps, with between 18 and 22 per cent of employees on track and delays of 15 to 16 years. 

The findings point to a growing need for employers to rethink how they support financial wellbeing in the workplace. As retirement becomes less predictable, organisations may need to adapt both financial planning and people strategies. 

This includes reviewing workforce models, reassessing succession timelines and considering how to support employees in building financial resilience earlier in their careers. 

There is also increasing focus on phased retirement approaches, allowing employees to transition more gradually out of the workforce while supporting knowledge transfer and cost management. 

Katie Horne, savings expert at Flagstone, said: “The fact that only 14 per cent of people are on track to retire when they want to is a significant finding – not just for individuals, but for the businesses that employ them. A workforce that retires later than planned is a workforce that costs more than planned. Finance teams that aren’t already modelling this risk may find themselves caught out. 

“This isn’t a future problem – the data shows it’s already here. The share of over-50s in work has grown significantly over the past three decades and there’s little to suggest that will change any time soon. 

“The businesses that will navigate this best are the ones that treat retirement planning as a financial risk to manage now, not a people issue to deal with later.” 

The research underlines a growing link between financial wellbeing and organisational performance. As more employees face delayed retirement, employers are likely to play a more active role in supporting long-term financial health as part of a broader workplace wellbeing strategy.