A quarter of adults in the UK never expect to retire, according to research that highlights the struggles many people are facing in being able to save for their retirement.
A study from insurer Phoenix Group has found that one in four adults expect to keep working into their retirement, a result of the fact many expect significant shortfalls within their pension pots.
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The company said: “The biggest change between retirement perceptions in the past and the future is a large, anticipated increase in people never really retiring because they want or need to keep working.”
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Phoenix Group says its research finds a “huge difference” in perceptions around how people have retired in the past, and what this could look like in future decades.
A ‘hard stop’ or ‘transitional’ retirement was seen as the most prominent way people have moved into retirement over the last 50 years but this is expected to dwindle significantly in the future, the company says. Only 15% of UK adults think it will represent most people’s experience in the next 10-25 years.
Phoenix Group’s Catherine Sermon, head of public engagement and campaigns, says: “It’s vital that this changing approach to retirement is matched by how people are supported in work and saving throughout their life.
“There will need to be more flexibility so people who want or need to remain in work for longer are able to do so. Millions of adults are off track and not saving enough to provide the retirement income they expect and may end up delaying their retirement plans as a result.”
The research follows findings from Scottish Widows that shows 28% of all adults in the UK and 21% of over-50s have no idea about the amount of income they will need in their old age.
How much pension do I need?
When thinking about how much you need to save for retirement, some of the things to consider are:
Research by the Pension and Lifetime Savings Association suggests an annual income of £43,100 is required for a comfortable retirement.
Interactive Investor has updated these figures to show how much money you are likely to need each year during retirement, depending on three different lifestyle levels.
These amounts won’t work for everyone and you will have to consider your individual circumstances and lifestyle, but it provides a good outline of how much you can expect to need.
The change over the past year is even more stark when you consider the size of the private pension pot needed to deliver those incomes. For a minimum standard it has jumped £23,400 over the last year to £59,900, for moderate it has risen £42,800 to £290,800, while for comfortable it has rocketed £68,700 to a total of £598,700.
Alice Guy, head of pensions and savings at interactive investor, said that the high rates of inflation seen over the past 18 months had had a “devastating impact on the spending power of peoples’ pension income”, meaning they needed a higher income just to maintain the same standard of living.
As a rough rule of thumb, some people aim to retire on two-thirds of their salary. The median average salary is estimated to be £33,000, based on ONS data from 2022, and when the two-thirds rule is applied, places the median earner between the PLSA’s moderate and minimum categories.
