Delaying retirement in 2012

Some new research from Prudential has found that more than 10% of people who were planning to retire in 2012 are going to defer their retirement.

Of those planning to put off their retirement, around one-third say they do not want to stop working yet.

Two-thirds of those deferring retirement in 2012 say they are postponing their retirement because they cannot afford to retire at this time.

Despite these pressures on retiring on time as planned, early retirement remains an aspiration for many.

According to the survey, the average age of people planning to retire is age 60 and this remains unchanged from the survey last year. It is on average seven months younger than the planned retirement age in 2010.

This research raises a couple of important points.

Firstly, the current economic environment is making retirement an increasingly challenge practice in 2012.

Record low Gilt yields have driven down annuity prices. Falling stock market values have also depressed pension fund values, leaving less available to secure an income in retirement.

Secondly, plans for an early retirement need to be adjusted as life expectancy continues to improve.

A selected retirement date needs to be realistic. With all of us living on average for longer, it is no longer realistic to retire at age 60 unless you are prepared to build a substantial pension fund during your working life.

Retirement objectives differ between individuals. The old notion of ‘retirement’ as your 60th or 65th birthday where you finish work for the rest of your life is probably no longer realistic for most of us.

What is important is a robust plan for retirement which is integrated within your wider Financial Plan.

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