Just one in seven (14%) people are on track to retire when and how they want, new research from Flagstone has revealed.
Respondents were considered ‘on track’ for retirement if their projected pension pot would meet the amount needed for their chosen retirement income and age.
The research found that, on average, people would like to retire at 61. However, based on current savings and contribution levels set against their income goals, Flagstone’s modelling suggests most people won’t be able to financially do so until 83.
The average contribution, across all demographics, is £6,963 a year, with workplace pensions remaining the most common saving method (61%).
Britons aged 55 and above have an average of £146,668 saved for retirement. However, based on respondents’ stated income needs, the average target retirement pot is £1.42 million. This reflects the length of time between a desired retirement age of 61 and average life expectancy, combined with the income people say they’ll need and the 4% withdrawal rule.
For those earning over £100,000, the average yearly contribution rises to £14,167, still leaving a significant gap.
Flagstone warned that the consequences extend beyond individual finances and into business forecasting, succession planning and workforce strategy.
When employees remain in their roles longer than planned, they typically earn more and receive higher employer pension contributions, both of which have an impact on the payroll.
The research also highlighted the impact on succession planning, with career progression for mid-level staff slowing as a result of senior employees remaining in their roles for longer.
Flagstone urged finance teams to take practical steps to plan ahead, including stress testing payroll forecasts against delayed retirement scenarios, reviewing succession timelines and investing in employee financial wellbeing.
Katie Horne, savings expert at Flagstone, said: “The fact that only 14% of people are on track to retire when they want is a significant finding, not just for individuals but for the businesses that employ them.
“A workforce that retires later than planned is a workforce that costs more than planned. Finance teams that aren’t already modelling this risk may find themselves caught out. This isn’t a future problem, the data shows it’s already there. The share of over-50s in work has grown significantly over the past three decades and there’s little to suggest that will change any time soon.
“The businesses that will navigate this best are the ones that treat retirement planning as a financial risk to manage now, not a people issue to deal with later.”
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