Only 14% of people are ‘on track’ to retire at their desired age with their desired income, leaving the majority at risk of retiring later than expected, according to a new study.
Travel and transport workers face the widest retirement gap with an average delay of 28 years between their desired age and likely age they can retire, according to the research from savings platform Flagstone.
It warned that delayed retirements are driving up payroll costs, stalling succession pipelines and complicating long-term workforce planning.
The research found that, on average, respondents would like to retire at 61.
Based on current savings and contribution levels, Flagstone’s modelling suggests most won’t be financially able to do so until 83 – a 22-year gap between expectation and reality.
The findings coincide with the UK government’s recent revival of the Pensions Commission, amid growing concern that future retirees may be financially worse off than current generations.
Flagstone calculated each person’s retirement pot ‘target’ using the 4% withdrawal rule. Each respondent’s projected retirement pot was modelled using a 5% annual growth rate and their current yearly contributions. Respondents were classed as ‘on track’ if their projected pot would meet the amount needed for their chosen retirement income and age.
Flagstone’s analysis reveals significant variation in retirement readiness across sectors. No industry studied is on track as a whole, but the gap is considerably wider in some than others.
|
Industry |
% On track for retirement |
Avg. gap between desired age and projected retirement age |
|
Arts & culture |
21.7% |
+15 years |
|
IT & telecoms |
18.6% |
+16 years |
|
Finance |
21.2% |
+16 years |
|
Sales, media & marketing |
18.8% |
+19 years |
|
Manufacturing & utilities |
12% |
+19 years |
|
HR |
10.9% |
+20 years |
|
Healthcare |
14.8% |
+21 years |
|
Legal |
8.7% |
+22 years |
|
Architecture & engineering |
12.8% |
+23 years |
|
Retail, catering & leisure |
9.3% |
+25 years |
|
Education |
8.5% |
+25 years |
|
Travel & transport |
4.7% |
+28 years |
Source: Flagstone research
Workers in travel and transport face the largest gap, with just 4.7% on track and an average projected shortfall of 28 years. The education and retail, catering and leisure sectors follow closely behind. At the other end of the scale, arts and culture (21.7%), IT and telecoms (18.6%), and finance (21.2%) are the closest to meeting retirement income targets.
Katie Horne, savings expert at Flagstone said: ‘The fact that only 14% of people are on track to retire when they want to is a significant finding – not just for individuals, but for the businesses that employ them. A workforce that retires later than planned is a workforce that costs more than planned. Finance teams that aren’t already modelling this risk may find themselves caught out.”
She warned that it isn't a future problem, “the data shows it's already here.” She said the share of over-50s in work has grown significantly over the past three decades, and there’s little to suggest that will change any time soon.
Ms Horne added: “The businesses that will navigate this best are the ones that treat retirement planning as a financial risk to manage now, not a people issue to deal with later.”
• The research was conducted by Censuswide on behalf of Flagstone, surveying 2,000 UK adults. Respondents who’d already retired or answered ‘not sure’ were excluded, leaving 1,622 valid responses.