Work until 74 if you have no retirement savings

Standard Life has calculated the real retirement age of many people in the UK who currently have no retirement savings as at least 74.

With Government plans to increase the pension age until 68, those who have no retirement savings and who have to rely on state benefits, will see a large fall in the pre-retirement earnings.

For example, a 27 year old man currently earning £25,800 will retire when he is 68.  If he has no retirement savings, he will be dependent on the state scheme which will only cover 34% of his pre-retirement income.

If he waited to retire until he was 79, he would receive 66% of his pre-retirement income, through annual increases to state benefits because the payments have been deferred.

It clearly is important to save as much as possible for ones retirement.

This is a point echoed by Andrew Tully, Senior Pensions Policy Manager, Standard Life who said: “These figures paint a stark picture of retirement reality for many people in the UK today.”

“The holy grail of retirement saving is to fund an income worth two-thirds of your pre-retirement income. 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.”