Britain is facing a pension time bomb according to the World Economic Forum (WEF). This means many could have significant shortfall from their pension to sustain an adequate retirement income.
Retirement rise schedule
The Government has just announced that a planned increase to 68, due to happen between 2044 and 2046, will now take place between 2037 and 2039.
WEF spokesman Michael Drexler said: “We must address it now or accept that its adverse consequences will haunt future generations, putting an impossible strain on our children and grandchildren.”
The UK is one of four countries worldwide – the others being the USA, Japan and Canada – where life expectancy is expected to rise to over 100 by 2050, creating 2.1 billion people over the age of 65.
Drexler added: “If increases in life expectancy were matched by corresponding increases in retirement age the challenge would be less acute.”
Pension savings gap
The pension savings gap is the shortfall between the current retirement pot and the amount of money required to maintain an income of 70% of pre-retirement levels (the necessary amount to give a pensioner an unchanged standard of living).
Saving for the future
Report co-author Jacques Goulet said the issue was at crisis point, adding: “There is no one ‘silver bullet’ solution to solve the retirement gap.
“Individuals need to increase their personal savings and financial literacy, while the private sector and governments should provide programmes to support them.”
When would you like to retire?
The findings are clear, a longer retirement is inevitable and the funding for it will shift even further towards the individual.
The WEF believe workers need to save between 10pc and 15pc of their annual salary to support a reasonable level of income in retirement.
If you have a retirement date in place, it is essential to seek professional advice so that your savings plan will be sufficient for your retirement goals.
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1 Global Workforce Study, Towers Watson 2012, 2 ICM survey, commissioned by Unum 2011, 3 DWP, 4 ONS