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Nearly two-thirds of workers retire before state pension age

Nearly two-thirds of workers retire before state pension age
Emma Lunn
Written By:
Emma Lunn
Posted:
29/04/2024
Updated:
29/04/2024

According to research by Just Group, 62% of retirees left the workforce before state pension age, with more than a third (34%) dipping into their pension before retiring.

The figures come from Just Group’s Countdown to Retirement survey, which found that about two-thirds of over-55s retired before reaching the current state pension age of 66.

More than six in 10 (62%) of the 1,050 retired over-55s surveyed left the workforce before receiving their state pension. A fifth (19%) stated that they retired as soon as they started to receive the state pension, and the same proportion (19%) claimed they retired sometime after receiving the state pension.

Male retirees were more likely than their female counterparts to retire before reaching the state pension age (69% vs 55%).

More than a third (34%) of those who retired before they reached the state pension age said that they also withdrew money from their pension between the age of 55 and finishing full-time work, highlighting widespread use of pension cash by many people yet to give up work.

Meanwhile, data from the Financial Conduct Authority’s (FCA’s) Retirement Income market update raised concerns about the sustainability of income withdrawals. It found that 40% of income drawdown plans were being withdrawn at an annual rate of 8% or over, with 13% seeing regular withdrawals of 6-7.99%.

‘High levels of early pension access’

Stephen Lowe, group communications director at Just Group, said: “The majority of people are retiring before they reach state pension age, putting extra pressure on their retirement finances, because they must bridge the income gap between stopping work and starting to receive the state pension.

“Unsurprisingly, our survey also discovered high levels of early pension access, with nearly three in 10 (28%) taking money out of their pension before retiring, rising to more than a third of those who stopped working before state pension age.

“The majority of people using income drawdown strategies are extracting more than 6% a year, substantially higher than benchmark so-called ‘safe’ rates of closer to 3-4%, exacerbating concerns about how long people’s pension income will last.

“We would urge people approaching the age when they can access their pension, and those thinking about when they can afford to leave the workforce, to seek help before making irreversible decisions.

“Seeking support from a professional financial adviser remains the gold standard. However, making an appointment with free, independent and impartial Government guidance service Pension Wise can give people a good understanding of their options.”

Related: Pension withdrawals grow as many access funds ‘to stay afloat’


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