3 reasons you probably won't be able to retire until you're 70

Close up shot of senior couple holding hand. Loving couple sitting together and holding hands. Focus on hands.
Close up shot of senior couple holding hand. Loving couple sitting together and holding hands. Focus on hands.

The retirement landscape has changed dramatically over the last 30 years or so.

Once upon a time, it was generally your employer's responsibility to look after you in retirement. People would work for the same firm for a number of years and then receive a pension that was based on how many years they'd worked for that company and their final pay. Retirement was something to look forward to.

However, things are different these days. Pensions have changed. Today, most people are responsible for looking after their own retirement savings. And as a consequence, many people are going to have to work for a lot longer than they would like to. Here are three reasons you may have to work until you're 70, or older.

Your retirement savings are low

According to research from Aegon, the average pension pot for those aged 55-65 in the UK is just £106,000. That's a long way short of the amount that financial experts advise people should have saved by that age. With many people living into their 80s and 90s, and healthcare costs rising, it's likely that a lot of people may simply run out of money at some stage during retirement. And don't think the State pension will save you. Currently, it's just £164 per week. Could you rely on that in retirement? These numbers suggest that many Brits will have to keep working in their 70s to top up their retirement savings.

You're not saving for the future

It's not surprising that average retirement savings are so low, when you analyse UK savings statistics. For example, in the 2016/17 financial year, just 17% of the population contributed to an ISA. And the amount invested during the year actually fell around 23% on the year before. It's clear that there are a number of Brits that are simply not saving for the future. A lot of these non-savers are going to get a shock when they reach retirement age and realise that they have minimal assets.

Your money isn't working for you

You may also be forced to work into your 70s if your money isn't invested properly. While there are plenty of Brits that do save regularly, a large number of these savers keep their money parked in cash savings. For example, nearly half of all ISA savings are held in Cash ISAs. That's worrying.

Average interest rates on Cash ISAs are currently around 1%. At the same time, inflation is running at 2.4%. What that means is that over time, money parked in cash savings is actually losing purchasing power. You've worked hard for your money. Why not make it work hard for you?

If you want to avoid working in your 70s, it could be a sensible idea to ditch the cash savings and instead, consider investing in growth assets such as shares, funds and investment trusts that can grow at 6%-10% per year. Grow your wealth at that rate over the long run, and you'll give yourself a chance of retiring at a decent age.

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