Two thirds retire earlier than planned, mostly due to ill health and job loss, survey finds
While many dream of retiring early, for most of us it’s simply not a viable option. However, results from the recent Aegon Retirement Readiness survey show that 60 per cent of respondents had to leave work sooner than planned, mostly due to ill health or job loss.
Commenting on the survey results, Aegon’s chief executive Simon Skinner said: “A surprisingly high number had to retire earlier than they expected to due to ill health or unemployment. Unfortunately, many of these individuals couldn’t rely on the government pension as they hadn’t reached the state pension age.”
Early retirement, when unplanned, often means people are left without a stable income for a period of time. Despite this risk, more than three quarters of respondents (77 per cent) have no backup plan if they can’t work until their planned retirement date.
“The survey results show us that those who are forced to retire earlier than they want to face some real challenges. Perhaps the biggest challenge is the income gap between early retirement and receiving their pension,” adds Skinner.
If you do use your savings to fill this gap, you’ll have less to support you and your family later on in your retirement.
“Traditionally, many people relied on deposit interest to supplement their retirement income. Nowadays, with such low interest rates, not everyone will get the income they want from interest earned on their savings, so people need to think differently about how they fund their retirement income,” says Skinner.
It’s also important to remember that retirement income should last for your lifetime, which can be a lot longer than you might imagine. Worryingly, the perception of retirement and life expectancy is skewed, with the survey showing most Britons plan to retire at 65 for an expected period of 18 years. However, on average, half of 60-year-olds today can expect to live until they are 90.
All of these factors mean more and more people are looking for alternative retirement income solutions. To meet this growing need, Aegon offers a guaranteed minimum income through its Aegon Secure Lifetime Income solution. Customers get a guaranteed level of income for the rest of their lives alongside the opportunity to benefit from any growth in their underlying investments. Their income can grow but will never fall. Customers can also choose to delay taking income and, for each year they do this, Aegon will increase their income by 3.25 per cent of the original investment.
“This gives customers certainty over their minimum returns if they decide not to take income right away, and assures them of a lifetime income,” says Skinner. “So, if you’re one of the 60 per cent who have had to retire early, you can have security at whatever point you need.”
Death benefit options are also given, so any money remaining will be left to your loved ones, which Skinner feels is of significant value as many alternative long-term income guarantees do not allow you to pass on anything when you die.