UK adults want to retire at 62 but in reality they expect to work until the age of 67.
A 50-page report by Standard Life Centre for the Future of Retirement, revealed the gap between when people want to retire and when they think they actually will, has widened in the past year.
In addition to this, half of those in employment expect they will need to work beyond their state pension age, up from 46 per cent last year.
Based on the responses of 6,000 people across the UK, 83 per cent said the world feels more uncertain than it did a few years ago.
As a result, half of those who feel uncertain say they are more likely to build up cash savings.
Additionally, only 51 per cent think the state pension will still be available for all by the time they retire.
The report also found people were twice as likely to prioritise saving for a holiday than saving into a pension.
Catherine Foot, director of the Standard Life Centre for the Future of Retirement, said: “Those facing a gap between their retirement hopes and expectations can take meaningful steps to narrow it with the right support, however advice and guidance plays a crucial role here too – from encouraging people to plan earlier and save more consistently if they can, to helping people find ways to manage financially in the years before the state pension begins.”
Generational differences
Across the generations, 41 per cent of Gen Z had a workplace DC pension, the lowest across the four generations.
Millennials were the group with the highest proportion of people with a DC pension (59 per cent).
This generation also had the highest proportion worried about energy costs (69 per cent) and also who expected to work beyond state pension age (54 per cent).
When it came to Gen Z, 48 per cent were happy to take more risks with their money for the chance of higher returns and a quarter held crypto.
Among Gen X just 37 per cent felt positive about their current financial situation and 47 per cent expected their standard of living in retirement to be worse than that of their parents.
Baby boomers had the highest proportion of respondents who described themselves as living comfortably on their current income.
While 55 per cent said their standard of living in retirement is or will be better than that of their parents.
“It isn’t only the pensions system that needs to adapt. Many people feel unable to continue working into their late 60s and beyond, so careers and workplaces must evolve if longer working lives are to be realistic and sustainable.
“That means embracing flexibility, bolstering support for carers, and encouraging non-linear career paths that allow people to retrain or step back and re-enter in later life.
“The growing retirement expectation gap highlights the need for a system that supports flexibility, resilience, and confidence in later life – underpinned by policies, employers and accessible advice that empowers people to achieve the retirement they hope for,” Foot added.
alina.khan@ft.com
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