According to new research from Scottish Widows, 20% of Brits, amounting to more than 10 million people, say they’ll work until they’re physically unable to, while 6% – another three million people – say they expect to work until they die.
This is despite the first increase in minimum automatic enrolment (AE) workplace pension contributions which came into effect on 6 April.
While the increase in AE workplace pension contributions will help people narrow the gap in their retirement savings, there are many who need to be doing more to ensure a comfortable retirement. Scottish Widows’ research shows that 44% of people are not saving its recommended 12% of their salary towards retirement each year, which is more than double the new minimum AE contribution level of 5%.
The research reveals that 51% of Brits expect to continue working at least part-time past retirement age, and 18% say that working beyond the age of 65 will be a necessity rather than a choice.
24% expect to have completely retired by the time they’re 65, the research reveals. Young people are least hopeful of this being a possibility, with only 5% of 18-24 year olds expecting to retire by the age of 65, but this proportion doubles among 25-34 year olds (11%) and triples among 35-44 year olds (16%).
18% of people say they’ll work longer than they want to because they worry about their level of saving. 32% of 25–54 year olds worry they haven’t been saving enough in their early years, and 39% of people fear running completely out of money in retirement.
Women are more concerned than men about the cost of later life. 43% of women are concerned that they’ll run out of money during retirement, while only 34% of men feel this way. Others worry about facing potential shortfalls due to policy change, with 37% citing concern about changes to the state pension, such as a further increase to the retirement age.
Despite the majority of British adults recognising the need to work longer to prepare for their retirement, a significant number have no contingency in place should they face increasing costs in later life. When told that people going into a nursing home can expect to pay an average of £866 per week for this, 22% of respondents said they’d never considered how they would cover this cost, and another 22% said they’d rely on the state to pay for care.
However, 62% of people say they are unsure what behaviour they would change to make up for increasing retirement spending. Only 12% say they will hold off drawing down their maximum pension allowance for as long as possible, and just 8% say they will forego leisure spending to prepare for retirement spending.
Robert Cochran, retirement spokesperson at Scottish Widows, said: “While the idea of a ‘cliff edge’ retirement – when people around the age of 60 to 65 give up work once and for all – has been disappearing in recent years, our research clearly shows this is a necessity rather than a choice for too many workers.
“Auto-enrolment has been a great success in kick-starting the savings habit for millions, and the increase in minimum contributions from this month should, in the long-term, mean that more people have valuable pension funds to live off as they approach later life. With life expectancy expected to continue rising, it’s worthwhile remembering that saving for the future doesn’t need to stop at ‘retirement age’.
“Only a third of people who expect to carry on working past retirement age think they will continue to pay into a pension – over time this number is likely to go up.”