A new study by Baring Asset Management reports that 1 in 10 people – double from last year – say that they will have to retire between the ages of 66 to 70 to be able to make ends meet.
Pensioners are hit hard in these economic times, as the rise of both inflation and the cost of living make fix-income pensions values diminish.
A Troubling Report
In addition, the Baring report found that the number of people planning to retire early, from 56 to 60, has decreased every year since the beginning of the recession. In 2008, one-third of Britons considered early retirement a possible goal.
Now, just 11% think that they will be able to afford it. Yvonne McDiarmid, chief executive of Money Advice Scotland, predicts a trickle-down negative effect of this generation of pensioners being forced to work longer: “”Although these people have very good reasons to do so … people staying in work for longer means there are fewer jobs for the younger generation.”
The report also shows a further 12.8 million people, roughly one-third of British adults in the workforce, have no idea at what age they can hope to retire.
A shocking 10% say they have no plans to retire at all.
Fixed Incomes to Lose Purchasing Power
Prudential also released a concerning report on pensions recently. Findings show that a pensioner retiring this year on a fixed income may lose up to 60% of their pension’s value over a 20-year retirement, as fixed income pensions do not rise with inflation.
Furthermore, while the average person expects an annual income of £16,600 pounds as pensioners, that fixed income will be the equivalent of having a £6,700 income twenty years from now. The diminishing value of pensions means that sacrificing extra cash now towards your pension later is an absolute necessity.