Early retirement and ill health are driving early exits from the workforce and having a major impact on the UK economy with an estimated £31bn in lost output annually, according to a new study.

Analysis by the Standard Life Centre for the Future of Retirement found the over 50s make up one in three workers in the government’s Industrial Strategy sectors, making them key to delivering growth.

The think tank warned that early workforce exits among over-50s are a key risk which are costing the UK economy.

Its report, Counting on Experience, warns that demographic changes, if left unaddressed, could severely constrain the growth potential of industries that the Government is relying on to drive economic security, productivity and regional development across the UK.

It has called for the government’s incoming Industrial Strategy to include support for workers over 50 to unlock growth and plug skills and workforce gaps.

Patrick Thomson, head of research analysis and policy at the Standard Life Centre for the Future of Retirement, said: “Most of the workers who will determine the success of the UK’s Industrial Strategy are already part of the workforce. Our economic future, driven by these high-growth sectors, rely heavily on the experience of over 50s – yet we’re at risk of letting them slip away.

“If we don’t act now to help them stay in work, we risk stalling growth before we’ve even switched on the engine. Supporting longer working lives isn’t just smart economics – it’s essential for a fairer, more resilient society in which people can work for as long as they want or need to in order to save for a decent quality of life in retirement.”

Eight key growth-driving sectors identified by the government employ 11.1m people in total, of whom 3.4m, nearly one in three, are aged 50 or over, and 450,000 are aged over 65. The share of over 50s rises as high as 38% in defence and 36% in advanced manufacturing.

Sector

No of workers over 50

Average age of workers

Creative Industries

670,000

44.8

Digital and Technologies

650,000

43.9

Professional and Business Services

490,000

45.2

Advanced Manufacturing

410,000

45.6

Clean Energy industries

390,000

45.1

Defence

350,000

45.2

Financial Services

270,000

43.5

Life Sciences

200,000

44.1

The average age for the UK workforce as a whole is 43.8.

The average age of workers in these sectors has increased by seven years since the early ‘90s.Workers in these sectors are now aged 44.6 on average compared to 37.6 in 1991. Seven of the eight sectors are older on average than the economy as a whole, a sign of both the deep expertise within these industries and the urgent need to plan for the realities of our changing workforce.

• Public First provided data analysis to inform this report, which drew on the following datasets:

ONS Labour Force Surveys (1991, 2019-2024)
ONS Wealth and Assets Survey (2022)
ONS Census (2021)
ONS Business Register and Employment Survey (2023)
ONS Annual Survey of Hours and Earnings (2024)