Financial necessity drives retirees to work across Europe

Created at 3 Jul · 10:10 AM1 source↑ Market-relevant

IN SHORT

Across the EU, pension income is significantly lower than late-career earnings, leading many retirees to continue working. While enjoyment is a primary motivator, financial necessity is a major driver, particularly in Baltic states, Cyprus, Romania, and Bulgaria, highlighting pension system inadequacies.

Key Numbers

€58pension income for every €100 earned in late career

1 in 6EU pensioners at risk of poverty

36.3%working retirees citing enjoyment as main reason

28.6%working retirees citing financial necessity as main reason

12.9%EU individuals working after first old-age pension

1.7%working retirees in Romania

54.9%working retirees in Estonia

44.2%working retirees in Latvia

43.7%working retirees in Lithuania

41.7%working retirees in Sweden

37.7%working retirees in Norway

29.7%working retirees in Cyprus

28.5%working retirees in Finland

4.2%working retirees in Greece

4.5%working retirees in Spain

5%working retirees in Croatia

68.5%working retirees in Cyprus citing financial necessity

54.3%working retirees in Romania citing financial necessity

53.6%working retirees in Bulgaria citing financial necessity

48.2%working retirees in Croatia citing financial necessity

47.9%working retirees in Latvia citing financial necessity

39%working retirees in Portugal citing financial necessity

38.1%working retirees in Hungary citing financial necessity

37.7%working retirees in France citing financial necessity

35.8%working retirees in Germany citing financial necessity

19.6%working retirees in Spain citing financial necessity

29.7%working retirees in Italy citing financial necessity

9.8%working retirees in Norway citing financial necessity

9.4%working retirees in Sweden citing financial necessity

3.7%overall EU share of pensioners working out of financial necessity

0.9%pensioners working out of financial necessity in Romania

21.2%pensioners working out of financial necessity in Latvia

20.3%pensioners working out of financial necessity in Cyprus

17.3%pensioners working out of financial necessity in Estonia

8.9%pensioners working out of financial necessity in Bulgaria

7.7%pensioners working out of financial necessity in Hungary

7.5%pensioners working out of financial necessity in Slovakia

4.5%pensioners working out of financial necessity in Germany

3.7%pensioners working out of financial necessity in France

1%pensioners working out of financial necessity in Spain

2.8%pensioners working out of financial necessity in Italy

Who's Involved

Eurostat

source of data on EU pension income and working retirees

Platon Tinios

Professor from Piraeus University commenting on Greek pension policy

Olga Rajevska

Academic from Riga Stradins University on pension system adequacy

Kène Henkens

Professor from Netherlands Interdisciplinary Demographic Institute on changing norms and retiree health

Lauri Leppik

Professor from Tallinn University on the concept of financial necessity

Financial necessity drives retirees to work across Europe

↳ Why This Matters

The data highlights significant disparities in pension adequacy across Europe, revealing that a substantial number of retirees are forced to work due to financial hardship, impacting their quality of life and indicating potential systemic issues within national pension schemes.

Key facts

Pension income in the EU is significantly lower than late-career earnings, with one in six pensioners at risk of poverty.
In 2023, 12.9% of EU individuals continued working after receiving their first old-age pension.
The percentage of working retirees varies widely, from 1.7% in Romania to 54.9% in Estonia.
Financial necessity is the primary reason for working retirees in Romania (54.3%) and Bulgaria (53.6%).
The overall share of pensioners working out of financial necessity across the EU is 3.7%, ranging from 0.9% in Romania to 21.2% in Latvia.

Pension income across the European Union is considerably lower than late-career earnings, creating financial difficulties for many retirees and placing nearly one in six at risk of poverty. While a significant portion of pensioners continue to work after retirement due to enjoyment and a desire to remain productive, financial necessity is also a major contributing factor.

Data from 2023 reveals that 12.9% of individuals in the EU continued working in the six months following their first old-age pension receipt. This rate varies dramatically across member states, from a low of 1.7% in Romania to a high of 54.9% in Estonia. Latvia, Lithuania, and Sweden report over 40% of their pensioners continuing to work, with Norway and Finland also showing substantial figures.

Financial necessity emerges as a critical driver in several countries. Among those who continue working, the proportion citing financial need ranges from 9.4% in Sweden to 68.5% in Cyprus. Romania and Bulgaria stand out, with over half of their working retirees stating financial necessity as the main reason. This situation suggests an inadequacy in their respective pension systems, unable to provide sufficient income, according to experts.

When considering the overall percentage of pensioners working due to financial necessity, the EU average stands at 3.7%. Latvia leads with 21.2%, followed by Cyprus and Estonia. Experts highlight that in the Baltic states, low pension levels necessitate continued work for a decent standard of living. Major economies like Germany and France show rates of 4.5% and 3.7% respectively, while Spain has the lowest rate at 1%.

Experts also point to broader trends contributing to post-retirement work, including improved health and education levels among retirees, and a shift in employer attitudes driven by demographic changes and labour shortages. However, it is cautioned that many in poorer countries may wish to work but face employment barriers, and that 'financial necessity' is a relative concept influenced by various economic factors beyond just public pension amounts.

Frequently asked questions

In the EU, a person who earned €100 between ages 50-59 would receive €58 in pension income between ages 65-74, according to Eurostat.

The primary reasons are enjoying work and remaining productive (36.3%), followed by financial necessity (28.6%).

Estonia has the highest rate at 54.9%, followed by Latvia (44.2%), Lithuania (43.7%), and Sweden (41.7%).

Romania (54.3%) and Bulgaria (53.6%) report the highest shares of working retirees citing financial necessity, followed by Croatia (48.2%) and Latvia (47.9%).

Across the EU, 3.7% of all pensioners continue to work due to financial necessity, with Latvia (21.2%) and Cyprus (20.3%) having the highest rates.

What Happens Next

01Further analysis may be needed to capture the impact of Greece's 2022 policy change on working pensioners.

02Future data will likely reflect evolving employer attitudes towards hiring older workers.

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Cadence

How It Developed

Pension income in the EU is substantially lower than previous earnings.

Nearly one in six EU pensioners face poverty risk.

Reasons for working retirees vary, with enjoyment (36.3%) and financial necessity (28.6%) being key.

In 2023, 12.9% of EU individuals worked after receiving their first old-age pension.

The percentage of working retirees ranges from 1.7% in Romania to 54.9% in Estonia.

Latvia, Lithuania, and Sweden have over 40% of retirees working.

Greece, Spain, and Croatia have very low rates of working pensioners.

Greece saw a policy change in 2022 encouraging registered working pensioners.

Sources

Retired but still working: Where in Europe is financial necessity the biggest reason?Euronews