Today’s workers will be forced to work into their late 70s and beyond if they want to enjoy the same level of pension as their parents’ generation, according to the report (pension advisors).
The study, The Death of Retirement, published by the Royal London, looked at how long people would have to work to achieve a good quality of life in retirement if they only contributed at the current minimum 8 per cent levels required by the Government under its auto-enrolment scheme.
Key findings were based on someone on average earnings targeting a pension of two thirds of their pre-retirement income.
Securing inflation protection and provision for a surviving spouse meant they would need to work to age 77 if they contribute only at the statutory level. This scenario is based on starting to save at 22 and contributing every year until retirement.
The report also looked at what would happen to someone who didn’t start contributing at the statutory minimum level until later in life. It found that those who started saving at 35 would need to work until later in life.
It found that those who started saving at 35 would need to work until they were 79 for a pension of two-thirds of pre-retirement income with index-linking and provision for windows and widowers.
Those who delayed starting until 45 would have to work into their 80s to make up the shortfall, according to the report.
Steve Webb director of policy at Royal London, said; “without significant increases in contributions, we could be witnessing the death of retirement”.
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