Only a third of people will be able to retire when they expect

senior man shredding pension plan

We may have woken up to the fact that we won't be able to retire at the kind of age that many people had been looking forward to, but the experts warn that most of us are still hopelessly optimistic about our planned retirement age - and the vast majority will fall short of even our lowered expectations.

The research, for Aegon, found that we're starting to realise that we may not be able to retire at the kind of age we always expected to hang up our boots - because 93% of us have fallen behind on our retirement savings. Most of us are resigned to the fact that we are going to have to work later in life.

However, the study showed that despite the fact we're increasingly willing to work beyond the age of 60, most people want to retire earlier than the state pension age. By 2018 the state pension age will be 65 for both men and women, but at that point people expect to retire much earlier, at around 63 years of age.

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There's every chance we're going to miss this target. Just one in three people are confident that they will be able to afford to retire when they want to, and a quarter are concerned that a lack of money is going to leave them stuck at work, longing for freedom.
Some 61% of UK workers are planning to carry on working if they haven't saved enough by the time they hit their target retirement age, with one in three expecting to continue in their current job, a quarter hoping their employer will come up with some sort of part-time or flexible role, and almost one in ten assuming they'll have to work for themselves.

This reflects the results of a study from Prudential, which found that more than one in five pensioners have gone back to work since reaching the State Pension age - or are planning to do so in the future. While 61% say they want to in order to keep themselves busy, 56% say they have to because they cannot afford to retire.

Stan Russell, retirement income expert at Prudential, said: "Although it's striking to see how many retirees are choosing to return to work, it's not optional for some people. While many say that working in older age is a good way of staying active, there are others who are forced to go back to work to make ends meet."

But what do you think? Do you plan to retire in your 60s or your 70s? Let us know in the comments.

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Only a third of people will be able to retire when they expect

Pension experts at Mercer have identified the countries with the best pension systems. At number 10 is Singapore.

The system is based on the Central Provident Fund, which covers everyone in a job. Some of the cash can be withdrawn during your working life, and a prescribed minimum drawn down at retirement as an income.

Overall, Singapore scored 65.9 out of 100. It fared well on sustainability measures, and integrity, but relatively low incomes in retirement dragged its combined score down.

The UK scored 67.6 out of 100. The system was ruled to have great integrity, and good incomes in retirement. The overall scores were also up from the year earlier, as auto-enrolment was rolled out further, bringing more people into workplace schemes.

The researchers, however, were worried about how sustainable the system would be in the future. They called for an increase in minimum pensions, and added that more people ought to be encouraged into workplace schemes and persuaded to contribute more to their pension. They also wanted to see more people saving privately for their pension, and working later in life.

In Chile the state offers means-tested assistance, a mandatory centralised pension for employees to contribute to, and there are voluntary employer schemes.

Chile score 68.2 out of 100. Its highest score was for integrity, with another good mark for sustainability. Relatively low incomes in retirement let it down, and the researchers said the biggest improvements would come from raising the contribution levels.

Canada has a universal flat-rate pension - with a means-tested supplement. There’s an earnings-related pension based on lifetime earnings, plus voluntary workplace and private schemes.

It scored 69.1 out of 100. Its best score was for incomes in retirement, while it also performed well for integrity. Its only relative weak point was how sustainable it might be for the future - particularly because older people don't tend to stay in work.

Sweden has an earnings-related system with notional accounts - although this system was introduced in 1999 so it’s still in transition from a pay-as-you go system to a funded one. There’s also a means-tested top up.

Sweden was given 73.4 out of 100. It scored excellently for integrity, and well for sustainability. The overall score was brought down by incomes in retirement, and the researchers called for more workplace and private pensions.

Switzerland has an earnings-related public pension, a mandatory occupational system and voluntary private pensions.

It scored 73.9 out of 100. It fared well for integrity and reasonably well for incomes in retirement. The researchers just questioned its sustainability.

Finland has a means-tested basic state pension and a range of statutory earnings-related schemes. It scored 74.3 out of 100.

It had high integrity scores, with a less positive result for incomes in retirement, and a surprisingly low score for sustainability. The researchers called for higher minimum pensions, higher mandatory contributions and encouraging people to work longer to improve sustainability.

The Netherlands has a flat-rate public pension and quasi-mandatory earnings-related occupational schemes - which are industry-wide defined benefit schemes based on lifetime average earnings.

The system scored 79.2 out of 100. All its scores were high - particularly for the integrity of the system.

The system in Australia consists of a government scheme, a mandatory employer contribution into a pension, and additional voluntary contributions from individuals.

It benefits from the fact that all workers have been automatically enrolled in their company pension schemes for some time, so participation rates are high. The minimum contributions have also been raised recently, which means workers are building reasonable retirement incomes. It had an overall score of 79.9 out of 100, with the only question mark being over sustainability.

Denmark’s system includes a basic state pension, means-tested state top-ups, a fully funded defined contribution scheme and mandatory occupational schemes.

The researchers said it was "A first class and robust retirement income system". It scored 82.4 out of 100, with high marks across the board.


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