“People working for longer should be expected for a number of reasons. First, we’re living longer. Second, much of the change is driven by women where retirement age equalisation policies will have influenced employment patterns at older ages. Thirdly, we’re reaching a point where we’re starting to see the first cohorts DC savers retire, and many of them won’t have enough saved to retire comfortably. However, I also hope that the health benefits associated with work are starting to be appreciated too, so that some of this change is voluntary rather than required to make ends meet.
“Our analysis of over half a million DC savers shows that three quarters will not have enough to live off when they stop working. For these people the only option is to work for longer. This could be by staying longer in existing jobs or moving to part-time and alternative employment as part of a transition to retirement.
“These employment statistics indicate the beginning of a longer-term trend, as more people retire on insufficient DC pension savings and less on DB. It’s Generation X that is the ‘first generation’ of pure DC savers and will be the hardest hit, as they won’t benefit from auto-enrolment in the same way that younger generations will.
“Many of those approaching retirement may have the added pressures of elderly parents requiring care at one end, and children who need financial support at the other.
“There is evidence of more flexible working options becoming available to those of retirement age, but as a nation we’ll need to do more to support those who wish to stay in employment for longer - be that for financial or other reasons. We need to ensure that we move from a culture of consumption to one of saving as there is a limit to how long people can continue working, and there’s a limit to how much employers can support that.”
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