According to the latest pensions trend report from the Office of National Statistic (ONS), the average Briton is now retiring almost a year later than they were just six years earlier.

In 2004, the average man retired at age 63.8 and the average women at 61.2 but by 2010 these ages had increased to 64.6 and 62.3 respectively.

This is an increase of 0.8 years for men and 1.1 years for women.

The increase is being attributed to the combined effect of a decline in final salary pension schemes and insufficient private pension funding, made worse by poor investment returns and the dramatic fall in annuity rates over the last 15 years.

This means that more and more people can no longer afford to retire and must therefore continue working.

In addition to people retiring later, over 120,000 more people are working full time after they have reached their state pension age.

Scott Gallacher, a chartered financial planner and director of Leicester-based IFAs, Rowley Turton, said that with continued low interest rates and annuity rates at an all-time low, it is even more essential that people wake up to their own retirement crisis and realise that they face three stark choices: –

• Retire on a much lower income than their current salary,
• Work much longer, possibly into their 70s or 80s, or to
• Increase their pension contributions significantly.

The report also highlighted that if more people work past the state retirement age, it will block younger workers from the same jobs.

This comes as new research from pension provider Friends Life revealed that almost a quarter (23%) of the working baby-boomer generation (over 50s) is focused on making ends meet in the current climate, when asked about their top financial priorities.

This represented a marked change over the past decade, as just 14% indicated that making ends meet was at the top of their list of priorities ten years ago.

More than a fifth’s (21%) biggest financial concern is saving for retirement Over 43% are still paying off a mortgage and of those 30% owe more than £50,000.

Colin Williams, from Friends Life, said: “The fact that almost a quarter of the working over-50 population are struggling to make ends meet is worrying. This period of life is a time when the focus should be on consolidating and planning for retirement, though it seems in reality substantial numbers are having to concentrate on simply getting by.

“While our research shows people are more focused on saving for their retirement than they were ten years ago, it is worrying that only 21% listed this as being one of their top five financial priorities.

“This just highlights the fact that it is more important than ever to get the message through that saving for retirement is crucial. If many are struggling to make ends meet whilst they are still working, then they may find themselves in more dire straits when they reach retirement, so early planning is critical.”