This report is a shocker:
If you’re over-50 and looking forward to a wealthy retirement, think again. Chances are you’ll be forced to work for 11 years after reaching your state pension age if you want to keep up a decent standard of living.
The shock warning that millions of workers are going to be too poor to be able to afford to retire came from the Pensions Policy Institute.
The good news is that the report was published in Great Britain. The bad news is that the statistics are very similar to the USA.
The think tank said an income of £11,000 would provide the minimum acceptable standard of living in retirement and could be achieved by 85 per cent of people aged 50 or over who are still working. But only if they continue to work and save until they are eligible for a state pension.
“However, for many people, an income in retirement at this level is unlikely to be considered adequate,” Ms Cleal pointed out. The institute reckons a person would need a retirement income of at least 50 per cent of their gross salary to be comfortable.
In the USA, the Social Security Administration estimates that the retired person will need 70% of his income to live comfortably.
We read: “almost half – 45 per cent – would have to work and save for 11 years or more after receiving their state pension.”
With the state pension age increasing to 66 for both men and women by 2020, that could mean millions being forced to work until they’re 77.
Britain faces what Americans face: long-term unemployment. “There are now 118,000 people aged 50 or older in the UK who have been unemployed for two years or more – a 45 per cent increase in a year.”
Michelle Mitchell, the charity director general of Age UK said: “These figures show that the traditional pattern of retiring and living comfortably on a pension earned over many years of working has broken down.
“Lower annuity returns and other factors mean that more and more people will have to work past their state pension age – and often for many years – if they are to have enough money to live comfortably.
Workers do not see it coming there. They do not see it coming here, either.
Mike Morrison, the head of pensions development at AXA Wealth, said the news should be a wake-up call for all generations. “For those already aged over-50, for whom retirement is not too far off, planning ahead has never been more crucial.
But hardly anyone is planning.