Many people believe they will have to continue working until they are 70 to maintain their incomes despite wanting to retire 10 years earlier, a new study shows.
Almost four out of five Irish workers say they are financially unprepared for retirement while more than half calculate that their savings will not last, according to new research published on Thursday.
While most people want to retire at around 60, most expect to continue working until they are 65 while “many anticipate working until 70″, says the study, done for bankers, finance advisers and retirement planners.
Half the 1,700 workers surveyed expected to work part-time after retirement to support their incomes, the study notes.
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Many workers do not understand that they retire on the income their pension savings will generate, not on the pension pots themselves, the report states.
Researchers found that the key issue was not employees’ participation in pension plans, but understanding retirement planning itself, with 35 per cent of people saying they do not full understand the schemes to which they contribute.
Confidence falls as people approach retirement. Among those aged 55 to 64, only one person in 10 believes that they are financially prepared.
While auto-enrolment has forced more people than ever to save for retirement, many workers are unsure of what their contributions mean in practical terms.
Similarly they are not sure when they can afford to retire and what lifestyle their pensions will allow, says the study, The New Retirement Reality, carried out by Amárach Research for the Financial Planning Standards Board Ireland.
Emer Kirk, the board’s chief executive, said that the State had made good progress in encouraging pension participation.
“But this research shows clearly that participation is not the same as preparedness. The real gap now is understanding – and being able to picture not just the money, but the life you want after work,” she added.
Workers are saving, but many do not know what their savings will deliver once they retire, Kirk argued.
“Without that clarity, people delay decisions about contributions, careers and retirement timing,” she observed.
“Financial uncertainty is no longer just a personal issue; it has become a workforce planning issue for employers.”
Showing workers what their savings mean in income terms at 60, 65, or 70, would aid decision-making, suggests the study.
The Retirement Planning Council of Ireland, lobby group the Institute of Banking and financial services education business, LIA, also backed the research.
The four organisations said the study was the most comprehensive of its kind carried out in the Republic.
