UK workers plan to give up work before they turn 62. However, they could be facing up to a retirement reality check, according to new research from Prudential.
Prudential’s new Intergenerational Retirement Study found that 11 have yet to start saving into a pension, and the average age that those who are saving for retirement started to do so was 27.
The results also show that as people get older their target retirement age tends to get later. However, across most age groups people expect to retire well below the State Pension age.
|
|
All respondents | aged 21-30 | aged 31-40 | aged 41-50 | aged 51-65 |
|
Average target retirement age
|
61years,
8 months |
60 years,
6 months |
60 years,
8 months |
61 years,
8 months |
62 years,
10 months |
|
Current State Pension age
|
N/A | 68 years | (Now aged 31)
68 years (Now aged 40) 67 years |
67 years | Variable ages up to 67 years depending on gender and date of birth |
Sources: Prudential’s Intergenerational Retirement Study – July 2016.
State Pension age calculator: https://www.gov.uk/state-pension-age/y/age – correct to October 2016.
Despite the widespread confidence in being able to retire early, 18% of under-50s are worried that their savings aren’t on track and they’ll have to work on past their target retirement age. A further 37% of under-50s fear that they’ve only saved enough to just get by in retirement. By contrast, 87% of those aged 51 to 65 are on track to give up work as planned, the majority of whom say they expect to live comfortably in retirement.
To further underline the shock that many younger workers may have coming their way when the time comes to stop working, more than half of those under the age of 40 (53%) estimate that their retirement incomes will be roughly equal to or below the average incomes of those retiring in 2016. This means that people who are anything up to 45 years away from retirement are expecting to be able to live on £17,700 or less per year, which of course will be worth considerably less in real-terms, when they give up work.
Vince Smith-Hughes, a retirement income spokesperson at Prudential, said: “The desire to retire as early as possible is completely understandable, but with life expectancies increasing all the time and the average retirement now lasting over 20 years, it is unlikely to be achievable for everyone.
“As people’s retirements get longer the responsibility for funding them will shift even further towards individuals. Pensions are about saving for the long term so the best way for most people to secure a comfortable retirement is to save as much as possible from as early as possible in their working life.
“For many people with a specific retirement date in mind, it is likely that a consultation with a professional financial adviser will help to put a savings plan in place to make sure they meet that goal with sufficient savings in their pension pot.”
Prudential’s research also found that the 11% who are not yet saving for retirement say that on average they don’t expect to start saving into a pension until they are 46 years old. Included in the ranks of those not yet saving are 9% in the 51 to 65 age bracket.