More than 2.1 million British adults aged between 55 and 64 (44 per cent of non-retired GB adults in this age group) do not know when they will be able to retire, according to research by Baring Asset Management.
The study found that nearly two fifths (38 per cent or 13.5 million people) of all non-retired Brits do not know when they will be able to retire while 12 per cent (equivalent to 4.3 million people) do not plan to retire at all.
The results of this year’s survey are in stark contrast to the results from before the financial crisis in 20082. Back then, 100 per cent of non-retired respondents were confident that they would retire, with only one per cent saying that they did not know at what age they would be able to do so.
The research has also identified a significant change in the outlook for people closest to retirement-age (i.e. those aged 55 – 64) in just the last year. Of the respondents in this age category in 2011, 30 per cent (1.5 million people) were unable to say at what age they planned to start retirement. Today, this figure has increased to 44 per cent (or 2.1 million adults) – this jump equates to some 660,000 more adults of retirement age not knowing when they will be able to stop working compared with last year.
Of those that plan to retire over the age of 65, almost two thirds are men (65 per cent) and 35 per cent are women, suggesting that proportionally men are likely to retire later.
Of the 4.3 million (12 per cent of all non-retired British adults) with no plans to retire, 17 per cent are in Wales and the South West. Only seven per cent of people in Scotland have no plans to retire. Of those who expect to retire, the average age now stands at 63.3.
Worryingly, over a third (36 per cent) of non-retired adults does not have a pension which suggests they will be relying on the state to fund their retirement. Of those in the at-retirement age group (55 – 64), 30 per cent do not have a pension up from 26 per cent in last year’s survey. Highlighting the on-going gender gap, over two fifths (43 per cent) of women do not have a pension, compared to 29 per cent of men. The absence of pension saving is also reflected down the generations with 69 per cent of 18 to 24 year olds without a pension while nearly one in three (30 per cent) of those aged between 35 and 44 have still to start saving into a pension.
Marino Valensise, chief investment officer at Baring Asset Management, says: “Our research reveals that, for a worryingly large proportion of the British population, retirement is very uncertain. A significant number cannot afford to retire, owing to a combination of increasing longevity, a decline in the value of annuities and a lack of pension savings. The auto enrolment scheme may go some way to addressing this problem and it will be interesting to see how this impacts the results of our survey next year.
“Particularly concerning is the fact that such a huge proportion of people aged 55 to 64 do not know when they will be able to retire. It is likely that these people will have suffered pension losses in recent years due to the financial crisis and therefore need to work longer to recoup funds. With a high number of younger people also failing to save, it is essential that the benefits of a pension are understood to avoid further generations of pension poverty. While financial demands extend beyond saving for retirement, starting to build a pension early in your working life is absolutely key to ensuring a comfortable retirement.”