Meanwhile, as the Government considers how to reverse the ‘Great Retirement’, as well as raising the State Pension entitlement age to 68 sooner than previously planned, 4 in 10 British adults (40%), equivalent to around 13 million people, think they will not be able to retire before the State Pension entitlement age, rising to almost half (48%) if the State Pension age rises to 68. Almost one-in-five (18%) said they didn’t know if they would be able to retire before the State Pension age or not.
This is despite widespread agreement among respondents that the ‘ideal’ retirement age is 60, with a third (33%) of respondents choosing this age as the answer to the question: “At what age would you ideally like to retire?”
In addition, the majority of British workers considerably overestimated the typical healthy life expectancy for workers in the UK, with only 1 in 10 correctly answering that it is between 61 and 65 (approximately 63 according to ONS data). More than a quarter (26%) vastly overestimated the healthy life expectancy age, which is defined as ‘the number of years a person can live in full health, without disease and/or injury’, stating it was between 76 and 80.
The findings come ahead of a Government-led review by Baroness Neville-Rolfe that is widely expected to conclude that the State Pension entitlement age should rise from 67 to 68 sooner than planned. Currently the State Pension age is set to reach 67 by 2028 and the minimum age at which people can access their private pensions will also rise from 55 to 57 in 2028. The increase from 67 to 68 is already slated to take place between 2044 and 2046, however there are suggestions this could be brought forward to the mid-2030s, potentially affecting people currently in their early fifties, who would have otherwise been looking forward to retirement at 67.
Further analysis by PensionBee suggests that the extra savings needed to retire early may be out of reach for an ‘average’ worker.
Someone with a typical pot of £40,000 saved up by age 50 (and who could potentially face a rise in State Pension age to 68) would be looking at a shortfall of around £153,400 on what they would need for the whole of their retirement, including after they start receiving the State Pension, in private savings to retire at 60 (about £232,000), versus what they might realistically have saved up by this time (an estimated £78,600).
The typical shortfall to make up for someone with an average pot size at age 50 and wanting to retire at 63 would be £89,400: they would need about £181,000 in private savings to lead a moderate lifestyle for their whole retirement, but would be likely to have amassed about half this, at £91,400. However they could still potentially afford to retire at 67, even if the entitlement age goes up to 68.
Becky O’Connor, Director of Public Affairs at PensionBee, commented: “The Government may want to end the Great Retirement, but the truth is that retiring before State Pension age is pie in the sky for many.
The ‘Pre-State Pension gap’ is the total amount of retirement income someone would need to retire earlier than the State Pension entitlement age and maintain a moderate lifestyle. Our analysis suggests that is way out of reach for a worker on an average salary and with a typical pot size at age 50.
The ‘ideal’ retirement age, according to our survey was 60, while the healthy life expectancy age is on average 63 in the UK, so we used these two ages in our analysis to give an idea of the value of this particular pension gap for people who might want or need to retire at these ages, rather than waiting until they get the State Pension.
“Meanwhile, 4 in 10 workers think they wouldn’t be able to retire before State Pension entitlement age, suggesting that bringing forward the increase to age 68 would not merely be a costly inconvenience for more people, it would effectively force more workers to carry on working until the point they can draw their State Pension.
“The research also reveals that many people overestimate the age to which they will remain healthy, perhaps indicating that retirement is not commonly-viewed as a way to protect people in ill-health from the demands of work.”
PensionBee has a calculator to help people work out how much they are likely to have for retirement here.
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