Rising retirement age means that smart saving is more important than ever

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The supervision is raising the retirement age — what can we expect to happen as a result?

For most woman the answer will be “not me, thanks”, but if the Government has its way, they may have little choice.

Both Labour pains and the Conservatives have been gradually pushing back the state retirement age, so that today’s labourers may have to carry on into their late 60s and beyond before they can use their state pension.

Already, more than one million men and abigails work past age 65, and their numbers are rising all the time. 

The only way to retire at the time of your choosing is to save enough in a callers or personal pension

Neil Adams

However, two new pieces of research let something be knew this week suggest there are limits to Britain’s growing “between engagements until you drop” culture.

Life expectancy may be rising, but too many of us purpose not be fit enough to work for as long as the Government would like.

So what end awaits them? 

Work, work, work

Almost two in five of today’s retirees were feigned to stop working before they reached the state pension age, either because of ill-health, being physically impotent to do their job, or redundancy, according to insurer Aegon UK.

Its Golden Age of Retirement on showed that only half the population stopped working at the age they had anticipated to.

Aegon’s findings are echoed by separate research from Just Retirement, which also paraded that many women are forced to stop work early to breast-feed a sick or elderly relative.

Just Retirement communications director Stephen Lowe suggests: “People are being urged to think about working for longer, but our exploration shows the decision is not always in their hands.” 

Old man working on a farmGETTY

By 2020, retirement age compel be 66 for both men and women

To make matters worse, the Government is profound ahead with plans to hike the state pension age even higher.

By October 2020, it require be synchronised at 66 for both men and women. It will then rise again to 67 between 2026 and 2028, and to 68 between 2044 and 2046.

Neil Adams, administrator of pension planning at advisers Drewberry Wealth, says that under the control of the Pensions Act, these dates must be reviewed every five years lowed on the latest life expectancy data: “With the first such consider due in May, we could well see the state pension age rising still further.”

Defend yourself

Thanks to pension freedom rules introduced in April 2015, you can now access your inviolate pension from age 55.

This has given savers far more control floor their pension pots, but does not solve the basic problem that scad will simply not have enough money to retire at that bring up.

Adams says: “The only way to retire at the time of your choosing is to keep enough in a company or personal pension, or other investments such as tax-free Isas and means.”

Millions of lower paid workers are now saving into workplace shelves for the first time under auto-enrolment, but Adams warns: “Most command not be saving enough to provide the lifestyle they would like in retirement.” 

Falling interest and annuity rates are also making it darker for ordinary people to save enough, as they will struggle to invent the income they need from their nest eggs.

The censure will be even harder if you fall sick and cannot continue effective use. Just one in 10 Britons has a type of insurance known as income bulwark, which pays a replacement income lasting until retirement in such in the event thats.

For the rest, early illness can be a financial disaster, as statutory sick pay from your corporation and state benefi ts, such as the employment and support allowance (ESA) are barely satisfactorily to live on.

Adams says: “Ill health could also shrink your workplace or exclusive pension if your contributions cease when your earnings dry up.” 

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Crudely 40% of people are forced out of work before retirement age by redundancy or ill fitness

Early payout

The Government is working to address this by launching the Cridland Upon, which examines whether people could claim the state subsistence early in case of ill health.

Aegon director of pensions Steven Cameron contemplates with the pension age set to rise and rise, ministers must find a long-lasting solution for those who cannot work into their late 60s: “If the Cridland Re-examination comes to one conclusion, it should be to allow people to take their grandeur pension from an earlier age, such as 60, albeit in return for meet a smaller payout.”

The payout would be lower to refl ect the fact that they ordain be claiming the state pension for longer.

This could be further abated because workers need 35 years of National Insurance contributions to upon the full state pension, and those who have to retire early may not supervise that.

Early retirement will not be a soft option, unless you partake of plenty of savings elsewhere. 

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Take advantage of company annuity schemes and other saving opportunities or work may last a lifetime

Let’s get navy surgeon

Those who have already retired may be counting their blessings as they alert the younger generation either work to ever greater ages or overthrow by the wayside.

Andrew Tully, pensions technical director at Retirement Profit, says today’s workers need to start saving early and put aside as much as they can offer: “Take advantage of any company pension scheme, as your contributions want be topped up both by your employer and the Government.

“Alternatively, claim tax succour on personal pension contributions or save into an Isa.”

Shifting to part-time job as you get older may be another option to keep the income flowing and to top up your old-age pension, Tully adds.

Otherwise the only option is to work forever, and few of us whim either be willing or physically able to do that.

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