More over 70s forced back into work to cover pension shortfalls and save their retirement

'People put their heads in the sand' with retirement says expert

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The number of people returning to work past the age of 70 in the UK has increased, according to research by financial advisory firm Salisbury House Wealth (SHW). Approximately 481,000 over-70s are currently in work, which marks an increase of six percent from last year, according to the Department for Work and Pensions (DWP).

However, prior to COVID-19, 578,000 over-70s were in employment, meaning the most recent figure is still quite far behind pre-pandemic levels.

In 2020, around 452,000 people over 70 were in work, with one potential reason for the increase being the fact that older Britons were asked by the Government to shield during the COVID-19 pandemic.

Many older Britons who were previously employed in sectors which did not allow them to work remotely, such as retail or social work, experienced financial losses due to not being able to work.

This means that people attempting to top up their pension savings may have found it more difficult to do so.

The average Briton has a pension pot of £62,000, according to the Financial Conduct Authority (FCA), which is not expected to be sufficient for a comfortable retirement.

Couples need a pot of roughly £155,000 to retire comfortably, while single pensioners require £192,000, according to consumer publication Which?.

Among the reasons for people working until a later age may be that the state pension is not deemed to be enough to live on for the average pensioner.

The full new state pension is currently worth £179.60 per week, which adds up to £9,339.20 for the year.

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Alternatively, the full basic state pension provides retirees with £137.60 each week, or £7,155.20 for a full year.

The Pensions and Lifetime Savings Association recently updated their retirement living standards, which estimates how much the average pensioner needs in order to fund their retirement.

The standards indicate that even for a ‘minimum’ retirement lifestyle which covers the essentials, a single pensioner would need £10,900, while a couple would require £16,700.

That means a single pensioner who receives the full new state pension would still need at least £1,500 of income outside the state pension each year.

Bearing in mind that many people will aim to save not just enough money for the bare minimum in retirement, but will want to have sufficient income to life comfortably, Britons could need to save quite a bit more towards their private pension pot.

Although the auto-enrolment scheme has helped workers to begin putting money towards their pension savings, the minimum level of contribution is not believed to be enough to provide people with the retirement lifestyle they desire.

SHW believes a shortfall in pensions and savings will have serious consequences on people’s standard of living. A shortfall could be causing people to work later into their life.

Data from The DWP has also shown that more men have returned to work at an older age than women.

The number of men in work past the age of 70 has risen by 26 percent from 2020, with 299,000 men still in employment.

On the other hand, the number of older women returning to work has actually fallen by 15 percent to 182,000.

SHW believes this could be because less women may have previously worked in sectors which have started to rebound following the height of the Covid crisis.

Tim Holmes, managing director of Salisbury House Wealth, advised that “investing into pensions early on and making regular contributions, will give individuals greater flexibility once they reach retirement age.”

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