Nearly 25% of us who live in the UK can no longer afford to retire at the time we had planned to, because of the falling value of our pension funds, according to research from Life Trust.
Around 12% of adults currently in employment say they might have to delay their retirement and defer their annuity purchase by as much as five years because of the economic climate.
For those who lose their jobs, pension prospects are even more grim. They will lose their employer’s pension contributions and will not be able to make their own contributions after the end of this tax year, unless they have some relevant earnings.
Of those aged 45-54, nearly 33% expect to be forced to delay their retirement with just under 20% planning to extend their working lives, perhaps by five years of more. It isn’t just the economic downturn making early retirement unaffordable, but also the issue of increasing longevity.
Mortality tables predict a life expectancy are 85 for a man and 88 for a woman. And, someone who is 55 now has a one in four chance of reaching 95, and a one in ten chance of reaching 100. A person who is 35 today has an almost one in three chance of reaching the grand old age of 95.
Some figures, just approximate: to obtain an annual pension annuity income of £25,000, a 50 year old man would need a pension pot of at least £430,000. A woman would, however, need a fund of £445,000 because women tend to live that bit longer. These figures don’t include any spouse’s pension, or any guarantees or escalation, which would require a far larger pension pot.
With 3% annual increases (escalation) and a 10 year guarantee (your estate will continue to receive your pension for 10 years after you die prematurely), the pension pots needed to provide an annuity income of £25,000 a year rise to £675,000 for a man age 50 and a massive £733,000 for a woman of the same age.
Check out our online quotation facility to get some annuity quotes for yourself. See if you can afford to retire early with a pension annuity or might other pension options be preferable?
