Pension specialists Aegon have released the results of a study that reveals only 51% of people are manging to retire at their target age, with millions of workers forced to leave work early (1).
In fact, as many as 10.6 million people have had to give up working for a variety of reasons including; poor health, redundancy and family responsibilities (2). The result of leaving work before their target age has been millions of people cutting back on their retirement savings or stopping saving altogether.
With Aegon’s research suggesting the average retirement age is 64, large numbers leaving work before this age will face an extended period with no state pension to draw, as well as a smaller pot to sustain them through retirement.
The report also reflects on the period since Pension Freedom was introduced in 2015 allowing savers to cash in all or some of their pots at 55. The warning from Aegon about cashing in pension savings early is particularly timely in a year when record numbers of men and women will turn 55 (2).
Data from the first full year of pension freedoms show that £4.4billion was withdrawn with a further £3.3billion taken out in the first six months on year two (3). These figures could be concerning when looked at alongside the high numbers of those retired (38%) who are not working for reasons beyond their control (1).
Stephen Lowe, of financial services company Just, said those thinking about drawing down some of their savings at 55 should consider what would happen if they aren’t able to work as long as they want (2). Mr Lowe commented “The financial consequences are likely to be magnified as people now have the option of getting at their cash earlier but may have to wait longer to claim the state pension”.
Steven Cameron, of Aegon, said: “With the concept of a fixed retirement date fast disappearing, people no longer excitedly count down the days until they [finish]. Indeed, an increasing number relish the opportunity to stay actively in work. With the likelihood of further state pension age increases, a growing proportion of people will simply be unable to stay in work until their state pension kicks in.” (1)
The value of pensions and the income they produce can fall as well as rise. You may get back less than you invested.