If you think you will retire early, then you need to think again, according to one leading financial firm.
The target for many was once a modest 65 years old, with many giving up work between 55 and 60 years old.
Now these aspirational targets are stretching further into the distance.
Children born today can look forward to a life at work into their 70s, while those that once dreamed of early retirement now believe they will work at least to the age of 66.
The number of people believing they will work to that age has increased by a third in just six months, says financial giant Skandia.
Golden years
A fifth of people inputting data into the firm’s online retirement planner quoted 66 as their retirement age compared to 15% at the start of the year.
The state pension age rises to 66 in 2020 and jumps to 67 in 2028.
The company explains that few people approaching retirement consider they have a big enough pension pot or sufficient retirement savings to give up work earlier.
Adrian Walker, of Skandia, said: “Retiring at 65 looks less likely for millions as the years progress. Our research shows that retirement savers are starting to accept they must work longer and those golden years they were expecting to live are a dream.
“Not everyone is retiring later because they cannot afford to. Some are choosing to work longer and reap the financial benefit.”
Pension tax breaks
The latest official figures from the Office of National Statistics reveals more than a million over 65s still work.
Skandia also points out that fewer public servants and executives are likely to retire with final salary pensions as companies ditch the expensive schemes in favour of the cheaper defined benefit pension.
As a result of relying on stock market performance to underpin their pensions, rather than a guaranteed return from a defined contribution scheme, many over 40s are turning to other income sources to supplement pensions, like property, savings in ISAs and direct investments in bonds and shares.
Barings Asset Management’s Marino Valensise explains that pensions are still important for retirement savers because of the tax breaks they offer – and because employers can choose to top-up contributions in workplace schemes.
“Pensions are still one of the best retirement savings options for most people,” he said. “More people should save into a pension and make this the main source of their retirement income.”
