Big price to pay for a happy retirement
RETIREMENT is increasingly a thing of the past as record numbers now expect to work beyond age 65.
The savings crisis is forcing an incredible 10 million Britons to delay their retirement, as record low interest rates destroy their pension pots.
Almost three quarters expect to work past the traditional retirement age of 65, while more than a third expect to carry on beyond 70, according to new research from Canada Life Group Insurance. One in 10 believe they may have to carry on working until age 85, with some fearing they will never be able to afford to retire.
However, more than half fear they will be unable to carry on working into later life because of health problems. Older workers are particularly concerned, often because they have already suffered bouts of ill-health such as cancer or diabetes. The positive news is that one in three enjoys their job and would like to continue working for as long as possible.
The research confirms how eight years of rock-bottom interest rates have taken their toll on the savings of UK workers. Canada Life marketing director Paul Avis said savers have suffered from paltry returns since interest rates were cut to 0.5 per cent in March 2009, forcing many to work longer than they wanted.
“As inflation continues to rise this problem will only become more pronounced. Insufficient pension savings are another key cause.”
Avis called on more companies to support older workers and consider offering income protection and critical illness cover to help employees cope with ill-health.
Many people are failing to save enough because they underestimate how many years they will spend in retirement, insurer Aegon says.
Official figures show men aged 65 today can expect to live to 83 and women to 86, but Aegon’s research shows that many could live for a lot longer than that.
Men have a one in four chance of living to 95, while for women the likelihood is one in three.
Aegon pensions director Steven Cameron said retirement planning is so hard because nobody knows how long they will live: “National statistics can never be more than a blunt tool for estimating individual life expectancy.”
A man with a £250,000 pension pot would need to save an extra £66,000 to cover a further seven years in retirement, if he wanted to maintain a sustainable income of £12,400 every year.
One in seven people aged 55-65 are approaching retirement without any private or workplace pension at all, Aegon’s figures show.
It means that more than 1.2million people are likely to retire with little or nothing to supplement the state pension.
Cameron added: “Retirees are sleepwalking into a lifeexpectancy time bomb.” Younger people, so-called “Millennials”, face a £1million pension shock, according to separate research from international actuaries Mazars.
One in three aged between 17 and 35 now believe that they will never be able to give up work completely.
Head of private client services Liz Ritchie said Millennials who still have dreams of retiring at 63 will need £1 million to enjoy a comfortable retirement: “This is daunting and makes it all the more important to seek financial advice and start saving for the future.”