16th July 2015
Almost two thirds, at 61%, of UK workers are planning to carry on working if they have not saved enough by the time they hit their target retirement age, according to new research from Aegon.
The analysis found that more than one in three, at 36%, plan to continue working in their current role until they have enough saved; a quarter, at 28%, expect their employer to create a part-time or flexible role; while 9% anticipate they will become self-employed.
Workers in healthcare, administrative and engineering and manufacturing sectors are most likely to expect their employer to create a flexible role for them, while those in the creative arts and design sector, at 32% are more inclined to become self-employed and start up their own business.
It coincides with a number of recent studies that point to a longer retirement for UK workers, where living beyond a hundred will become much more common for children born within the next generation. The latest Wealth and assets survey from the ONS showed that 58% surveyed in 2012-2014 now believe they will retire aged 65-69, up from 54% in the previous two years.
UK workers are waking up to the possibility that they may have to work for longer than they expected, as 93% of the UK public are falling behind on their retirement savings. Most it seems would prefer to work on rather than dip into their pension savings, with fewer than one in 10 at 8% UK professionals approaching age 55 planning to take a lump sum as they near retirement.
Angela Seymour Jackson, managing director workplace pensions, Aegon UK said: “Workers across the UK are waking up to the reality that they will likely have to work well past their planned retirement age to make up for shortfalls in their savings. With so many expecting to work on past traditional retirement age on more flexible contracts, employers will need to move quickly to accommodate this new later-life work culture. Creating a flexible and inclusive workplace strategy won’t only benefit those working longer to hit their savings targets but, according to recent research, will also prove good for business, adding £100bn to UK productivity.
“While there are benefits for the economy in older people staying in the workforce, it should be a matter of choice as to whether people continue working and not simply down to a lack of savings. For this reason it’s important that pension providers and employers engage workers early with their pension in order that they understand how on track they are with their savings.”
While it is clear that the majority of people expect retirement to be a gradual process rather than a hard cut-off, most still aspire to retire earlier than the state pension age. By 2018 the state pension age will be 65 for both men and women6. According to Aegon’s research, the UK is currently expecting to retire much earlier, at around 63 years of age, five years earlier than today’s average thirty year old will be able to.
Finance professionals, with the highest average pay of £38,000, expect to retire the earliest at 62, while those working in education, with a lower annual salary of £26,000, expect to retire later at 64. However, IT professionals who have the same average salary as those working in finance, still expect to retire two years after their counterparts at 63. Those working in Admin have a relatively low average income of £23,000, yet expect to retire relatively early compared to other professionals at 63.
People may be ambitious in their target retirement ages, but just a third, at 36%, of UK workers are confident about hitting their target. A quarter (25%) are concerned about retiring later than initially planned while 39% were neither confident nor concerned the research claimed.