Savers hoping for flexible retirement face working into late 70s, expert warns
Sir Steve Webb, a former pensions minister, warned that the dream of a flexible retirement where people gradually go part-time before giving up work entirely when it suits them could turn out to be a “mirage” – if people only contribute minimum amounts into their workplace pension pot.
Sir Steve, who is now director of policy at Royal London, said an average worker wanting a “gold standard” of retirement – where their pension income equates to two-thirds of pre-retirement levels – may have to work until they are 79 before they can afford to fully retire if they are aiming to reduce their working hours gradually.
Someone targeting a more modest “silver standard” of retirement – where their income is around half pre-retirement levels – could have to work until they are 69, Royal London calculated.
The scenarios are based on someone only saving into their pension at the legal minimum level, deciding to draw a state pension as soon as they can and immediately cutting down to part-time work by halving their previous hours.
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