New research* from Canada Life today reveals that 56% of 18-34-year old’s expect to work until they are at least 70. The research also found that young people's plans to work for longer are mainly driven by financial considerations. A third (33%) of the 18-34 age group don’t think their pension will be enough to fund their retirement, and as a result they will need to continue working beyond their state pension age. a further 21% are not sure how long their retirement savings will need to last them.
Only 27% of 18-34 year old’s expected to retire before age 70, while 14% didn’t know.
Andrew Tully, technical director, Canada Life said:
“Despite the clear success of auto enrolment, and the very low number of people opting out, there is a widespread lack of engagement around retirement and savings. There is general agreement the default 8% contribution rate won’t provide a decent standard of living in retirement for many people. Although retirement may feel like a lifetime away, this may be why such a large percentage of 18 to 34-years olds have seemingly resigned themselves to work well beyond the current state pension age.
“As we see the state pension age moving ever upwards, we will see big shifts in how people prepare for and enjoy retirement with many more remaining economically active beyond traditional retirement age. This creates a new set of challenges for retirement providers, employers and these individuals. Traditional lifestyle investment models will be less relevant, while employers will need to think about how they support an ageing workforce.
“Savers face some stark choices, accept their fate, choose to work longer, or try to save more. Working with a financial adviser will help you plan how you can slow down in your later years on your own terms.”
According to the latest Office for National Statistics data, the current average life expectancy for an 18-year old male is 86, although one in four men could reach the age of 96. For women this is 89 and 97. As the current state pension age for this generation is likely to be at least 68, there is a retirement funding gap of at least 18 years on average**.
* Source: research was carried out by Opinium amongst 2,000 UK adults aged 18+, weighted to nationally representative criteria. Research was carried out between 13th and 16th October 2020.
** Source: https://www.canadalife.co.uk/customer-tools/life-expectancy-calculator/