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01 Jun 2017

Delaying retirement until 70 can add £300 a month to your income, study claims

New research suggests that delaying retirement for a few years past state pension age could boost your pension pot by thousands of pounds.

Life insurer Aegon said that a 65-year-old could gain an additional £314 per month in retirement income (£771 per month instead of £457) by continuing to pay into their personal or workplace pension until the age of 70.

Even just working for an extra three years, to 68, would increase monthly income by £164.

“Those of working age today are waking up to the likelihood they´ll not retire at as early an age as their parents, and are no longer picturing state pension age as the defining ‘retirement moment´ at which they automatically leave the workforce,” commented Steven Cameron, pensions director at Aegon.

“The positive news or silver lining as some may see it, is that working a few years longer and keeping saving in a pension can dramatically improve retirement incomes.”

This is because of the “triple boost” of continued investment growth on the pension fund, further contributions being added, and ultimately fewer years to spread the fund over once the person is no longer working, Cameron explained.

Reporting on the study, personal finance website Moneyfacts said that this kind of pension pot boost could become increasingly common, as the employment rate of over 65s has doubled in the last 30 years (from 4.9% to 10.2%), and half of people now expect to work past state pension age.

“For those early on in their working lives, starting saving as soon as possible is key,” Cameron stressed. “But we can´t turn back time and those approaching traditional retirement age with less than they might wish for still have choices. For those who are able, continuing to work for a few years more not only keeps a salary coming, it can also produce a substantial uplift in retirement income.”

Copyright © M2 Bespoke 2017

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