British adults willing to work 10 years past retirement
Nearly three out of five people (57 per cent) planning to retire this year would be willing to work on in order to guarantee a higher income when they do retire, according to the latest research from Prudential’s Class of 2010 retirement survey.
And a quarter (25 per cent) would be happy to work for five years more, with 7 per cent of these people willing to put in another 10 years before retiring, the study of attitudes to retirement shows.
The research highlights changing attitudes to retirement as people come to terms with increased longevity – as well as the financial effects of the credit crunch and recession on retirement saving plans. The average 65 year-old man is expected to live to 83 and a 65 year-old women is expected to reach 85.
No more work for some
Prudential found that 18 per cent of those who are planning to retire this year believe they have saved enough to ensure a comfortable retirement and rule out working on even if it could guarantee them a greater income in retirement.
Another 21 per cent refuse to continue working past statutory retirement ages even if that means they will struggle financially.
The research shows it is the over-65s who are the most willing to keep working, with more than three–fifths (62 per cent) saying they would stay in employment to boost their retirement savings.
Vince Smith-Hughes, head of retirement income at Prudential, said: “Working beyond the normal retirement age is already a reality for many people who either have insufficient savings or simply want a greater income when they do come to retire.
“But for a lot of people planning to retire in the very near future the state retirement age is sacred and their expectation has always been to retire at 65. Once they reach that milestone, regardless of the amount of money they have, they simply do not want to work anymore. This is a potential issue because the average 65 year-old is likely to live for another 20 more years, and that’s a long time if you’ve only got limited retirement funds.
“If you’re not yet retired and you absolutely don’t want to keep working after you’re 65 then the only real way to achieve this is to save as much as you possibly can into a pension and other savings products. But I think a lot of people may well come to realise quite quickly that 65 is an artificial horizon and that stopping work altogether at this age won’t be possible.
“I think what our research confirms is how important it is to consider retirement many years before you actually reach it, and make sure you get financial advice to help you plan for retirement.”
Financial benefits of working beyond retirement
Prudential analysis shows that working an extra five years from age 65 and paying £100 a month into a pension of £100,000 could boost a retirement savings by an additional £53,000. Paying in £200 a month over five years could yield an extra £62,000.
Monthly contribution Investment growth Interest rates at retirement Final fund value
£100 5% a year 1.9% £129,000
£100 7% a year 3.9% £141,000
£100 9% a year 5.9% £153,000
£200 5% a year 1.9% £137,000
£200 7% a year 3.9% £149,000
£200 9% a year 5.9% £162,000
The 25 per cent tax relief on pension contributions means that a monthly deposit of £100 grosses up to £125 and £200 grosses up to £250. The figures above assume a 65-year-old male with a selected retirement age of 70, paying additional regular monthly contributions into an existing pension fund of £100,000.
Working longer could benefit those people who have not worked sufficient qualifying years to entitle them to the basic state pension. Men and women retiring need to have worked 30 full years to qualify for the full basic state pension.