People born between 1965 and 1980 are expected to work longer because they won’t receive the pensions their parents enjoyed.
Just a third of people aged 43 to 58 in the UK expect to retire by the time they reach state pension age, according to financial adviser Just Group.
Currently, the state pension age for workers born after April 1960 is 67, but this will rise to 68 between 2044 and 2046.
According to Just Group, Gen
If we look at the younger part of this cohort, both men and women aged 43 to 48, this number drops to 27%.
Over the past 25 years, the average retirement age has risen in the UK as life expectancy increases and older workers become more financially insecure.
According to recent government data, men are now exiting the labor market at an average age of 65.3 years, while the average age for women has fallen to 64 years.
The lowest average retirement age for men was 63 years old in 1996, and the lowest average retirement age for female workers was 60.3 years old in 1986.
What is causing your retirement anxiety?
There are many reasons why Gen X workers feel unable to retire at state pension age, often based on factors outside of their control.
“This is the age group most at risk of pension inequality,” said Stephen Lowe, group communications director at Just Group.
“Few people will be able to rely on defined benefit pensions, which offer more generous and guaranteed benefits than many of the ‘baby boomers’ who preceded them, while automatic enrollment in workplace pensions started too late. I couldn’t make much of a difference.”
Defined benefit pensions (DBs, also known as final salary schemes) are on the decline in the UK private sector, but are often seen as the gold standard for retirement savings.
A DB scheme is a type of workplace pension (separate to the National Pension), which means the retirement benefits you receive are determined based on your years of participation in the scheme and your retirement benefits. salary.
This is different from an alternative type of workplace pension plan called a defined contribution (DC) plan, which is becoming increasingly common.
One of the main differences between the two approaches is that with a DB plan, the employer is more responsible for providing income when the worker retires.
Alternatively, in a DC plan, the employer adds contributions to the retirement plan, but employees must manage their own pension fund investments.
This type of plan is generally considered to be difficult to predict because the value of the pension can rise or fall depending on the performance of the investments, and the amount paid at retirement is not fixed.
Auto-registration is too slow
Many people in their 40s and 50s feel cheated, not only because they are less likely to join a DC pension scheme, but because they do not particularly benefit from a policy called automatic enrollment.
Auto-enrollment is a technique that has been gradually introduced since 2012, and it does exactly what it says.
Previously, workers could choose whether to participate in a pension plan, but now employers must enroll eligible employees in a workplace retirement plan.
Opt-out is still a possibility, but only for 10.4% of newly enrolled employees as of August 2022. chose not to participate Participated in a workplace pension scheme (compared to 7.6% in January 2020).
Automatic enrollment means people are much more likely to start saving for retirement earlier, but this is less helpful for Gen Xers who are now nearing the end of their careers.
sandwich generation
In addition to missing out on favorable pension plans, people born between 1965 and 1980 also struggle with financial circumstances that are invisible to their parents.
As people live longer, more and more adults are becoming part of the “sandwich generation.”
This is a term used to describe a group of people who financially support children and young people while caring for a parent over the age of 65.
In a 2020 YouGov survey, 57% of Gen
Approximately one in 10 respondents also said they could not afford to save more because they were financially supporting their adult children.
Other reasons cited for lack of savings were inadequate pay, housing costs, limited work capacity, health problems, or saving for purposes other than retirement or real estate.
In addition, the loss of income related to COVID-19 has taken a toll on Gen X’s ability to save for retirement, but it has also prompted some to start thinking about their pension plans.
According to data released in 2021 by the UK’s International Longevity Center, 20% of Gen Xers have reduced or exhausted their savings due to the pandemic.