Britons are now older than ever when they retire, in the wake of a financial meltdown and five-year recession that has drastically affected their ability to save. Because of the lack of savings – which, to be fair, should be done over a lifetime and cannot be blamed completely on the recession – less than a third of Britons were able to retire when they reached the state pension age.
The change is a shocking difference from last year, where about one half stopped working when they hit retirement age.
The change in behaviour is largely believed to be because these older workers simply can’t afford to retire. Though it sounds drastic, continuing to work for just a few more years after retirement age can make a dramatic difference to your eventual income in retirement. Not only can you defer your state pension, which will give you a boost for each year that you avoid claiming it, but you also have more time to make pension contributions. For many without significant retirement funds, working past retirement age is the only way to ensure a comfortable retirement.
Shrinking Pension Pots
However, even many workers who do have some pension savings might have to continue working to avoid poverty in retirement. Recent economic development has hit pensioners on all fronts: funds are performing poorly, so worker’s pension pots are not growing at the expected rate.
The annuities that are usually purchased with these lower pension pots have seen their rates plummet, which means even less income than expected. Last but not least, inflation and the cost of living are through the roof, hitting those on a modest, fixed, income the most.
Joanne Segars, the chief executive of the National Association of Pension Funds, an organization representing pension providers, is not surprised at the findings and says that for many people it’s a surprise when they approach retirement age and realize they cannot afford to retire.
“Sadly, many people are finding their retirement plans turn out to be a mirage. They get near, realise they can’t afford it, and see the day when they’ll stop working slip further into the distance”, she was quoted as saying.
Helping Their Children
There has also been some reports further detailing why soon-to-be retirees do not have adequate pension savings. One such suspected reason is that pensioners are supporting their adult children financially, since every group of society is currently feeling the squeeze.
Many have called the baby boomer generation the “sandwich generation,” because they are struggling to make provisions for their own retirement while at the same time being sandwiched between the needs of their aging parents and adult children.
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