State pension income cannot be accessed until a person reaches 65 or 66 at the moment and the government has plans to increase state pension age to 68 in the coming years. This could be problematic according to new findings from Lancet Public Health.
Using mortality data and combining it with information from over 15,000 respondents, the report found that healthy working life expectancy (defined as the average number of years expected to be spent healthy while in work) from age 50 is 9.42 years.
This is obviously below the remaining years needed to reach state pension age.
Because of these findings, Quilter, the financial advice company, detailed that it is risky to rely on state pension at all.
Jon Greer, the head of retirement policy at the firm, commented on the study: “This study shows that it is risky to rely on your health allowing you to work until your state pension kicks in.
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“To avoid retirement benefits becoming overly expensive, state pension age is set to gradually increase.
“It is already planned that state pension age will go up to 68 and the overarching aim is to preserve the average state retirement at no more than a third of our adult lives, meaning state pension age must rise to match increases in life expectancy.
“However, this means that people will need to work longer before their state pension pays out.
“Although some people are happy to remain in employment longer and may even choose to delay retirement and work into their late 60s or even their 70s, this will be a challenge for others. It is especially problematic for those that suffer health difficulties and find they’re unable to work comfortably until state pension age.”
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Jon went on to highlight the only real thing that people can do to rectify this issue: “This study shows that healthy life expectancy varies significantly and it is dangerous to assume good health up until retirement benefits kick in.
“Although you can defer the state pension if you want to work longer, there is no option to take it sooner if you’re too unwell to work in comfort.
“The only way for people to retire sooner will be to have private savings in place, which are accessible from age 55.
“Having a decent pension pot could give someone the flexibility to retire early, reduce their hours or move into less demanding, lower paid work at the end of their career.
According to Pension Wise, there are six ways in which a person can tap into their pension pot when ready:
- They can leave the majority of it untouched to carry on growing
- Receive guaranteed income through an annuity
- Take adjustable income
- Take cash in chunks
- Take the whole post in one go
- Mix the options available