Delaying retirement becomes the norm as people forced to work longer

It’s getting harder to be able to afford to retire forcing more than half of retirees to delay giving up work.

That’s according to the Prudential which reckons that 51 per cent of those who plan to retire in 2016 are either already working past their state pension age or would consider doing so.

Just over a fifth of them say that’s because they can’t afford to give up work while nearly three in 10 fear they will not get enough income from pensions and other savings when they retire.

With expectations that they will be retired for 20 years it’s understandable that worries are growing about being able to have a decent standard of living after work.

Some, however, are worried that retirement will hit them in other ways with just over half wanting to continue working “to keep their mind and body active”.

Stan Russell, a retirement income expert at the insurer, said: “With this year’s retirees preparing to spend an average of 20 years retired it’s understandable why they now see giving up work as a gradual process rather than a one-off event.

“However, for everyone who can choose their retirement date, there are others who have no choice because they physically can’t continue at work or whose financial situation forces them to stay on.”

The stark warning from the report is that anyone who hopes to have some degree of choice of when to give up work should be trying to save as much money as possible as early as possible during their careers.

But a report from Royal London published earlier this week warned that today’s workers will be forced to work into their late 70s and beyond to get the same level of pension as their parents’ generation.

It reckons you would need to work to 77 to get the sort of pension that many people retiring today enjoy, and to 71 even for a more modest pension. That’s even if you save every year from the age of 22.

“Many face a cruel disappointment if they think that current minimum contribution levels will deliver them the sort of retirement they are looking for,” said former Pensions Minister Steve Webb, now director of policy at the insurer. “Without significant increases in contributions, we could be witnessing the death of retirement.”

Elliott Silk, of employee benefits company Sanlam warned that it’s time to re-defining retirement in the UK. He pointed out that retirees in the future are likely to have smaller pension pots and less income from the state and, ultimately, will need their retirement savings to last for more years due to living longer.

But the solution is in people’s own hands, he said. “To get the retirement people want, there is no alternative to saving more, now.”