Savings crisis will lead to 10 million working beyond ‘traditional’ retirement age
A record three quarters (73%) of UK employees will work past the age of 65, according to new research from Canada Life Group Insurance, showing a significant increase on the past two years.
More than a third (37%) of those who intend to work past traditional retirement age think that they will be older than 70 when they retire – while one in ten expect to be at least 85, if they manage to retire at all.
While enjoyment of job role plays a part in some working for as long as possible, health problems and a low return on savings are key factors contributing to the ageing workforce. Almost a third (31%) of workers say they will have to work longer because of low interest on savings, while over half (57%) expressed a concern about their health as they get older.
Paul Avis, marketing director of Canada Life Group Insurance, comments: “Savers have suffered from paltry returns ever since interest rates fell to 0.5% eight years ago. This is having a direct impact on UK workers’ retirement plans, with many forced to work longer than they would have hoped to. As inflation continues to rise, eating into the purchasing power of UK savings, this problem will only become more pronounced.”
A further factor in employees’ struggle to retire is poor pension planning. The research showed that more than a third (36%) say their pension will not be sufficient so they will need to continue earning a wage.
This emphasises the need for a financially stable workforce. Jonathan Watts-Lay, director, WEALTH at work, a leading provider of financial education, guidance and advice in the workplace, adds: “It’s a worrying problem that individuals are not saving enough for retirement. The bottom line now is that in today’s world, in the main, when it comes to having a decent retirement income individuals have three main options, to save more, work longer, or expect less.
However, employees often fail to optimise their retirement income due to the lack of understanding of the options available to them, coupled with a lack of workplace support. This is why supporting employees with their finances is vital if they are to optimise their income in later life.
Financial education and guidance delivered in the workplace can help individuals set and achieve their financial goals, giving them more control over their finances, and ultimately their retirement plans in the future. This should then be followed by the provision of financial advice to help employees understand their personal financial situation so that they are able to make informed decisions to maximise their income at-retirement.”
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