Published On: Mon, Feb 20th, 2023

Britons face £130,000 shortfall if they retire at 60 as state pension age rises further | Personal Finance | Finance

Research suggests a third of Britons want to retire by 60 but they would need an extra £130,000 in retirement income to do this. The current is 66 with legislation in place for this to increase to 67 and then 68 over the coming years.

Figures from PensionBee found those who want to retire at age 60 need an additional £130,000 in retirement savings.

People who want to retire at 63 would still need an extra £85,000 to cover their costs before they reach state pension age.

The average worker may struggle to achieve these extra savings, the group found. A person with a typical £40,000 saved up by the age of 50 faces a shortfall of £153,400 for what they would need for the whole of their retirement, even with the state pension.

If this person wanted to retire at 60 they would need £232,000 in savings. This compares with what their realistic retirement savings would be, of around £78,600.

READ MORE: Energy bills to rise by 40% as Hunt ends support

Becky O’Connor, director of Public Affairs at PensionBee, commented: “Retiring before state pension age is pie in the sky for many.

The ‘pre-state pension gap’ is the total amount of retirement income someone would need to retire earlier than the state pension entitlement age and maintain a moderate lifestyle.

“Our analysis suggests that is way out of reach for a worker on an average salary and with a typical pot size at age 50.”

Figures from the group suggest the typical shortfall to make up for someone with an average pot size at age 50 who wants to retire at 63, would be £89,400.


They would need some £181,000 in private savings to have a moderate retirement lifestyle for their whole retirement but would likely have saved only half this, at £91,400.

This person could still potentially be able to retire at 67 even with the state pension entitlement age going up to 68.

Ms O’Connor said: “The ‘ideal’ retirement age, according to our survey was 60, while the healthy life expectancy age is on average 63 in the UK, so we used these two ages in our analysis to give an idea of the value of this particular pension gap for people who might want or need to retire at these ages, rather than waiting until they get the state pension.

“Meanwhile, four in 10 workers think they wouldn’t be able to retire before state pension entitlement age, suggesting that bringing forward the increase to age 68 would not merely be a costly inconvenience for more people, it would effectively force more workers to carry on working until the point they can draw their state pension.

READ MORE: Inheritance tax expert says now is a good time to use up allowance

Some are predicting the move to 68 will be brought forward to the mid-2030s which could affect people currently in their early 50s, who may have been hoping to retire at 67.

PensionBee has an online calculator Britons can use to work out how much they are set to retire on.

The full basic state pension is currently £141.85 a week while the full new state pension is £185.15 a week.

Payments are increasing by 10.1 percent in April, with the full basic state pension increasing to £156.20 a week while the full new state pension is increasing to £203.85 a week.

The Government is considering changing the rule so the state pension age reaches 68 as early as 2035, according to reports from The Sun.

A DWP spokesperson “no decision” has been taken on the changes to the state pension age yet.

They added: “The Government is required by law to regularly review the state pension age and the second state pension age review is currently considering, based on a wide range of evidence including latest life expectancy data and two independent reports, whether the rules around state pension age remain appropriate.

“The review will be published in early 2023.”

Source link

Most Popular News