- Workers expect to retire at 63, two years earlier than state pension age in 2018
- Three in five (61%) plan to carry on working if they miss target retirement age
- Majority (64%) of UK workers not confident about retiring at target age
Three in five (61%) UK workers are planning to carry on working if they haven’t saved enough by the time they hit their target retirement age, according to new research from Aegon. More than one in three (36%) plan to continue working in their current role until they have enough saved; a quarter (28%) expect their employer to create a part-time or flexible role; while one in ten (9%) expect to become self-employed.
Workers in healthcare (40%) administrative (31%) and engineering and manufacturing sectors (32%) are most likely to expect their employer to create a flexible role for them, while those in the creative arts and design sector (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 generation2. The latest Wealth and assets survey from the ONS showed that 58 per cent of those surveyed in 2012-2014 now believe they will retire aged 65-69, up from 54 per cent in the previous two years4.
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 ten (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 £100 billion to UK productivity5.
“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.”
Retirement expectations
While it’s 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 to3.
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.
Retirement confidence
People may be ambitious in their target retirement ages, but just a third (36%) of UK workers are confident about hitting their target. A quarter (25%) are concerned about retiring later than initially planned while nearly two in five (39%) were neither confident nor concerned.