Ten million Brits to ‘work until they drop’
The research from Scottish Widows shows that while higher workplace pension contributions will help narrow the gap on retirement savings, many need to be doing a lot more to ensure a comfortable retirement. Two fifths (44%) of people are not saving the recommended 12% of their salary towards retirement each year.
As a result, many will have to work beyond retirement age. More than half (51%) of Brits now expect to continue working at least part-time past retirement age, and a fifth (18%) said that working beyond the age of 65 will be a necessity rather than a choice. Only a quarter (24%) expect to have completely retired by the time they’re 65.
Young people in particular are pessimistic about their retirement prospects – only one in 20 (5%) of 18-24 year olds expect to retire by the age of 65, compared with 11% of 25-34 year olds (11%).
Nearly one in five (18%) people said they’ll work longer than they want to because they worry about their level of saving. Just under a third (32%) of 25–54 year olds worry they haven’t been saving enough in their early years, and two-fifths (39%) of people fear running completely out of money in retirement.
The gender pay gap extends into retirement. Women tend to have smaller pensions because they are more likely to have spent time out of the workplace caring for children or relatives, and tend to be paid less. As a result, women are more concerned than men about the cost of later life. Just over two-fifths (43%) of women are concerned that they’ll run out of money during retirement, while only a third (34%) of men feel this way.
Robert Cochran, retirement expert 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.”