UK employees may need to work at least 11 more years for adequate retirement

Almost half (45%) of employees over the age of 50 may need to work and save for 11 or more years to achieve their target replacement rate of retirement income, according to a study by the Pensions Policy Institute.

However, the report, Extending working lives, also found that if employees aged between 50 and the state pension age continued to work, save and claim any means-tested benefits they are entitled to, 85% might have sufficient private and state pension income to meet the minimum income standard.

The findings showed that 10% of those aged between 50 and the state pension age who are still in work will only be able to meet the minimum income standard if they continue to work and save for a further one to five years.

Around 10% of those aged between 50 and the state pension age in 2011 who are still in work will only be able to meet the minimum income standard if they continue to work and save for a further one to five years after state pension age.

Niki Cleal, director of the Pensions Policy Institute, said: “In the last three decades, life expectancy has increased dramatically in the UK.

“On the whole this is good news for individuals, but it also means that many people will need to save more and work longer if they want to have an adequate retirement income.”

“The research found that the vast majority of the over-50s who are working in 2011 – around 85% – might have sufficient state and private pension income to meet a minimum acceptable standard of living in retirement of £11,000 per annum if they continue to work and save until they are eligible to receive their state pension.

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“However, for many people, an income in retirement at this level is unlikely to be considered adequate.”

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