Money too tight to pension

Over 1.5 million of those aged 55 and over claim they can’t afford to retire at state retirement age due to lack of pension savings.

Research published by Scottish Widows, reveals just how many over 55s say they simply can’t afford to retire. One in four (26%) of those aged 55 plus say that as things currently stand they will retire later than the current state retirement age – currently 65 for a man and 60 for a woman. And of this age group, one in three (34%) or 1.5 million say they might retire later because they just don’t have enough money in their pension pot to afford to stop working.

At the same time – four out of ten (42%) people aged 55 and over also make the point that the state pension simply won’t be enough to support the standard of living they would like in retirement.

This block to retirement for the ‘baby boomer’ age group would explain why they believe compulsion is necessary – more so than any other age group. Over half (53%) of all those aged 55 and over believe the nation should be forced to save.

Ian Naismith, head of pensions market development at Scottish Widows, says: "The current generation of over 55s is definitely divided into 'haves' and 'have-nots'. The 'haves' generally have good employer pensions, often based on their final salary, and can retire at or before state pension age with good incomes. The 'have nots' are discovering that they will have to work for longer than they might have expected just to make ends meet.

The worry is that with the decline in employer pension provision the next generation may well be dominated by 'have-nots', who realise they might have to work until quite a late age but do not feel they can afford to put aside money now. Not only will they have to retire later but they are losing out on the significant tax relief benefits that pensions offer. If this generation knew the Treasury would give any basic rate tax payer 22p for every pound they saved towards their retirement, increasing to 40p for higher rate tax payers, then maybe they would think again!"

An even starker picture is painted of the 55 plus age group – as the research reveals:

41% agree that money is tight and they don’t have much to spare
23% are more worried about their financial security than their health
26% say the only investment they have is the value of their house