Failing to predict the recent drop in pension income in their pension planning has trapped a third of pensionable workers, preventing them from retiring as planned, according to a report just published by Heartwood Wealth Management*.
The findings have led to a call for workers to begin their pension planning earlier, and treat pensions saving as ‘a 40-year engagement’.
Heartwood’s research revealed that nearly half of those aged 65 and over are planning to continue working until at least 70, but that most of those (29%) would prefer to be already retired, and are working because they cannot do without the money.
There are 3 main reasons why these over-65s believe they could not live on their current projected pension incomes:
- A third (32%) cited a fall in the value of their pension
- 27% blamed the higher cost of living
- 24% said they were still giving financial support to their children
- 8% were working to meet the rising costs of their medical care
“While the Government has chosen to position ending the Default Retirement Age as a victory for older people against age discrimination, the sad truth for many is that they’re not working through choice, but because they can’t afford to stop,” said Simon Lough, Chief Executive of Heartwood.
“While the current crop of working 70 year olds is still in the minority, this trend will rapidly spread through younger generations.
“ The only way to avoid being forced to continue working is to start saving earlier, and treat retirement planning as a 40 year engagement.”
Recent information from Moneyfacts showed that plunging annuity rates now give workers half the pension income they would have received from their pension savings 15 years ago.
*Survey for Heartwood by ICM of 450 adults aged 64+, July 2010
