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Millions of UK workers are likely to delay retirement due to the worrying gap between their desired retirement age and the adequacy of pension savings, according to a report.
Most people would like to retire at the age of 62, but 54% of UK retirees expect to work longer than they would like, on average by seven years.
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, according to Scottish Widows latest Retirement Report.
The report also showed that younger people would like to retire even earlier. Workers aged 18-29 wanted to retire at 61 and were 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 those surveyed 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%) 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.
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.”
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