45% of pensioners will need to continue working and saving for an additional 11 or more years prior to in order to secure a retirement fund which offers them an income correspondent of their working lives, according to recent research.
The study conducted by the Pensions Policy Institute investigated the effect that the government's plans to extend working lives would have on retirement incomes. They proposed £11,000 per annum (£211 per week) for a single person or £15,700 (£303 per week) as the incomes necessary to provide pensioners with the 'minimum acceptable standard of living.'
They found that the majority (85%) of those at State Pension Age should be able to meet the Minimum Income Standard through their state and private pensions combined. However people who had received medium to high working incomes would face a drop in their standard of living.
It was estimated that nearly a half of people would have to work an additional 11 or more years in order to maintain the living standards of their working life. This would see many Britons working up until they are 77 years old.
The report found that people with lower incomes would be more likely to be able to retire comfortably at State Pension age and maintain standard of living as their working income would typically be closer to their state pension and benefits entitlements.
Women and those in couples were also more likely to be able to retire earlier and match their working income. The research found that this is because couples can benefit from combining their incomes and women tend to receive a lower income than men.
People that were unable to work past State Pension Age due to illness or other reasons are set to be most affected by the plans to extend working lives. However those who do work for longer could see a benefit to their retirement income.
The report made suggestions which could help people to improve their pension income. They advised that those with health problems could benefit from 'shopping around' for enhanced annuity rates as these can offer higher annuity payments with the view that life expectancy will be shorter.
It was also suggested that:
"Working after State Pension Age can increase net income as a result of tax treatment."
A spokesperson for the Department of Life and Pensions stated:
"Life expectancy is increasing dramatically, so we have raised the state pension age to make sure the state pension remains sustainable for the future. It's important that people have the opportunity to work longer if they want to, which is why we have removed the default retirement age."
Joanne Segers, CEO of the National Association of Pensions Fund described the government proposals as a 'huge ask'. She explained:
""Many people in their 50s will be stunned by the prospect of working for another decade after they start getting their state pension. It is a huge ask."
The Institute's report shows that the planned rise of State Pension Age means that people should start taking provisions now for financial security during their retirement.
Niki Cleal, director of the Institute:
"Many people need to start saving more today, if they want to avoid having to work much longer than they planned and want to have an adequate retirement income in the future."