Since the abolishment of the Default Retirement Age in October this year, employees are now allowed to remain at work beyond what was previously considered retirement age. And with the current times of austerity, many people will feel forced to take advantage of this and will continue working well into their 70s and even 80s.
Recent research carried out by insurance and pensions company Liverpool Victoria shows that over a quarter of over-50s believe they will find themselves working an average of six years beyond retirement age since they will not be able to afford to stop working.
The state pension age is currently 65, and is planned to increase over the next few years, meaning that many people will be aged at least 71 before they can afford to retire. Some who took part in the survey thought they would be working for as much as 15 years beyond retirement age and could be in their 80s by the time they stop working.
The number of people planning to work well past retirement age shows the lack of confidence people generally have in the UK economy and in their own financial situations.
Ray Chinn, head of pensions at Liverpool Victoria, said: “The trend of people retiring well into their 60s, or even their 70s, has been increasing slowly over the last few years. The rising cost of living, low interest rates on savings and the fact that as a nation we are living longer has had a significant impact on our retirement aspirations and the amount of money we need to live a comfortable retirement.”
Employees are now allowed to continue working past retirement age but they can still claim their state pension at the same time.
Many people who have taken retirement have chosen to return to work because their personal or state pension was not enough for them to live on.
Coupled with the extended state pension age and scrapping of the default retirement age is the fact that a number of people do not seek professional advice about retirement planning.
Mr Chinn said: “In recent years we have seen many people cutting back on the amount they are saving towards retirement. As a result many will have no choice but to work later in life to maintain an adequate standard of living in old age.”
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