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Daily Insurance Industry News
Thursday 22nd of February 2018
September 9, 2009

Retirement at 74 plus for those who neglect planning

by Gill Montia

Story link: Retirement at 74 plus for those who neglect planning

Retirement at 74 plus for those who neglect planning

Having studied Government data, Standard Life has come up with a realistic retirement age for Britons with no retirement savings.

The insurer estimates that those who have neglected their financial planning will need to remain at work until between 74 and 86-years-of-age, taking into account the Government’s decision to increase the state pension age to 68 in the future.

According to the life and pensions expert, many of those expecting to rely on state benefits at the end of their working lives will receive a retirement income equivalent to a mere 21% of their pre-retirement earnings.

For example, a male currently aged 27 and earning an average salary of £25,800 will be eligible for a state pension at 68 years of age.

However, retirement at this point with no savings would leave that person on 34% of their pre-retirement income, or £170 per week in state benefits.

By deferring retirement until age 79, the same man would receive a respectable 66%, or two-thirds of pre-retirement income.

This comes about because of annual increases in state benefits that can be deferred.

Standard Life’s senior pensions policy manager, Andrew Tully, comments: “The holy grail of retirement saving is to fund an income worth two-thirds of your pre-retirement income.”

He adds: “If people rely on the state in the hope or belief that the Government will bail them out, they will either have to retire on a basic income or simply face the music and defer retirement until much later.”

 

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