New research from Standard Life, part of Phoenix Group, finds that people are planning to retire at or beyond their State Pension age, as they look to establish additional financial security for retirement.
On average, those currently aged between 45 and 64 say they would like to retire at 68 – two years later than the current state pension age.
This is likely due to the desire to have the time to build a solid pot to fund the duration of their retirement, as more than two in five (44%) say the biggest influence on when they’ll retire is their level of financial security. This consideration comes ahead of health and wellbeing (41%) and being happy to stop working (30%).
Changing pensions model and impact on retirement timings
The findings, contained in Standard Life’s Retirement Voice study, reveal that people are planning to retire at a much later age than those who are currently retired, which may be due to the responsibility for funding retirement now shifting to individuals.
In comparison, current retirees stopped work at the age of 61 on average. The main factors that influenced this decision were their own health and wellbeing (35%) and feeling happy about stopping working (30%). Less than a fifth (18%) based their decision to retire on when they felt financially secure.
Dean Butler, Managing Director for Customer at Standard Life, commented: “People are expecting to retire later than their predecessors, allowing further time to build up their financial security to last throughout their retirement. In contrast, current retirees were more likely to base their decision to retire around their health and being ready to stop working, with financial security less of an influence. Of course, it’s yet to be seen whether the expectation of a later retirement will become a reality, but this does illustrate a real shift in mindset for people considering their plans.
“With people having to take greater responsibility to fund their retirement combined with levels of outright home ownership at the point of retirement decreasing, it’s no surprise that more people than before are considering working beyond the state retirement age in the hope of securing a stable financial position when they eventually retire. Recent research2 from think tank Phoenix Insights calculates that if everyone worked until they were 68 and saved 12% of their earnings, more would be on track to reach the retirement income they expect. However, both saving more and working later in life will not be conceivable for everyone, and so it’s crucial that people engage with their finances as early as possible, in order to make a realistic plan for the future and be as prepared as they can be for retirement when the time comes.”