Greater flexibility may be needed in pension saving, the head of investment propositions at Scottish Widows has said in response to a new study that shows that the next generation may have to start saving at 25 years old to retire by their 70s. Iain McGowan said:
Offering more flexibility that combines the accessibility of an Isa with the tax benefits of a pension could help future generations face up to the twin challenge of saving for short-term financial hurdles like a deposit for a mortgage or a wedding while at the same time setting aside enough for retirement.
Someone born in 2012 could expect to build up £73,000 worth of student debt, according to economist Steve Lucas.
According to a new study, financial pressures from university and housing costs will mean the next generation would have to start saving at the age of 25 to prepare for 30 years of retirement. Mr Lucas said:
In the future, older workers - especially in the professional and business services sector - are likely to stay working longer into their 70s, but the nature of this work will become more flexible and probably more part-time.
Workers in manual or vocational careers are also likely to look to extend their working lives by undertaking a less strenuous, more part-time role.
The next generation face being in their 50s before they have paid off their student loans and in their 60s before they are mortgage free, research has shown today.
The Scottish Widows study argued that rising life expectancies, combined with people being saddled with large debts earlier in life, mean that today's children should start saving for their retirement at the age of 25 if they want to enjoy a comfortable old age.
Economist Steve Lucas argued that financial pressures from university and housing costs will mean that the next generation will only be able to afford smaller pension contributions, meaning they need to start saving from around 25 years old to prepare for 30 years of retirement.
The default retirement age in the UK has been fully abolished after being phased out from April this year. Daybreak's Dominic Reynolds reports:
The move was long overdue and hopefully the workplace is now much more welcoming to older workers. This change does not mean anyone has to be forced to work longer. But it does mean that employers cannot force people to stop, if they are perfectly good at their jobs and willing and able to work.
The fact is that people are simply not 'old' or 'past it' any more in their 60s and, after all the tremendous advances in healthcare and labour practices, there is no reason why those who want to keep working should be forced out just on the grounds of their age.
Reaching State Pension age doesn't mean you have to give up work.
You can carry on working and still receive your State Pension. You may also be able to change your working hours to suit you.
If you retire early, or stop work due to redundancy, ill-health or other reasons, your State Pension and other pensions you're entitled to may be affected.
Find out if you can have enough to live on in retirement on the Directgov website.
Your State Pension age is the earliest age you can get your State Pension. This is not the same as retirement age.
Retirement age is when you choose to retire, but you can still work after State Pension age.
Find out what your State Pension age is on the Directgov website.
The default retirement age is being phased out today.
This means if you didn't receive notice from your employer before 6 April 2011, you can’t be made to retire using the default retirement age of 65.
Your employer can only make you retire if this can be objectively justified in the particular circumstances.
If you feel your employer is treating you unfairly due to your age, you can now challenge this at an employment tribunal.
We hope that now it is illegal to force someone out of their job simply because they are 65 or over, it will make employers look beyond their staff's date of birth, objectively assess their skills and contributions and trigger a more positive and realistic attitude to older people.