More than half (54%) of UK retirees expect to work longer than they would like, on average by seven years, highlighting a worrying gap between people’s desired retirement age and the adequacy of pension savings. In addition to that, over a quarter (27%) of those who have made retirement plans don’t feel that they would ever be able to afford to do it.
Scottish Widows’ 20th annual Retirement Report also shows that younger people would like to retire even earlier, with those aged 18-29 wanting to retire at 61 and only prepared to work until they reach 64 if necessary - four years short of the age at which they will be able to access their State Pension.
Only a third (34%) of respondents think they are currently preparing adequately for retirement, and 38% are not on track for what the Pensions and Lifetime Savings Association deems as even a minimum retirement lifestyle. This is 3% higher than last year and is equivalent to an additional 1.2m people in that situation, more than the working populations of Liverpool and Birmingham combined.
The increase in those projected to suffer the poorest retirement outcomes has been driven by rises in the cost of living (for example rents which have gone up by 15%2) relative to the growth in wages at an average of just 6.2%.
Survey respondents also emphasised people’s reliance on the State Pension. Just over half (54%) expect the State Pension to eventually form a meaningful portion of their retirement income, with three quarters (75%) calling it hugely important in helping them pay for everyday necessities. However 12% of people are not convinced this level of help will be available to them by the time they retire.
Pete Glancy, Head of Pensions Policy at Scottish Widows, said: “The growing gap in retirement outcomes and people’s quality of later life, between those who are currently retired and those who will retire in the future, is of great concern. “However, people are starting to think about how their private pension pot might interact with their State Pension Entitlement to plan their retirement. But, there is still a real reliance on the State Pension, and while some will be able to use their private pension pot to give them the flexibility they are looking for in terms of retirement age, it’s only starting to dawn on others that they may end up working for much longer.
“It is likely to be a long time before Britain has been saving enough to give future pensioners the outcomes they hope for. In the meantime, helping people to make the very most of what they have is going to be critical. It’s the right moment for the new government to take a holistic view on people’s financial resilience throughout life, paying particular attention to those whose retirement outcomes are predicted to be much lower.
“At present only the wealthiest tend to rely on professional support from a qualified financial adviser. As an industry, we need to find a way to give people better support in making good financial decisions at a price more savers are willing and able to pay.”
Thinking about her own retirement experience and future career plans is British former long- distance runner and marathon world record holder, Paula Radcliffe MBE. Paula hung up her professional running shoes in her forties and is supporting the launch of the Retirement Report.
Paula Radcliffe MBE commented: "I hung up my running trainers and experienced retirement much earlier in life than many people do and when you reach that moment, it comes with a wealth of emotional hurdles. Excitement, fear, apprehension were all things I experienced and it can be scary to think about what comes next. I was incredibly lucky that I had good advice and started saving for my future from the start. This gave me the financial security and time to think carefully about what I wanted to do.
"With people expecting to work later into life, it's important to think about what that next chapter holds and do it early. It might be pursuing work that aligns with your passions or thinking about what will give you flexibility to spend time with loved ones. Whatever it is, keep that important eye on your finances. Aligning these priorities will mean that work will be more likely to support you, rather than frustrate you, throughout your life."
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