Nancy, 66, from London, has reached state pension age and would like to retire but cannot afford to, like millions of Britons who may have to work longer than they expected.
“There’s no chance of retiring for at least a decade,” says Nancy, who has been working in minimum wage, part-time roles for a property company since she was made redundant 12 years ago from a job in local government management. “I’m still renting, there’s no security. I’ve only been able to find badly paid temp work, and had to stop paying into my private pension,” she says.
“My rent is £700 a month, and will go up in April. I now pay £300 a month just for gas and electricity. I will quite possibly never retire – it’s that simple really.”
Nancy is one of dozens of people who shared with the Guardian why they are having to delay retirement for financial reasons.
Many cited being unable to save enough – or at all – for long stretches of their working lives, while various others said their carefully planned retirement finances had failed to keep up with the soaring cost of living, meaning their pension pots are now insufficient to keep them financially afloat once retired.
Figures issued by the Pensions and Lifetime Savings Association on Wednesday indicated that the estimated amount of money needed to enjoy a “moderate” standard of living in retirement had jumped by £8,000 – or 35% – from £23,300 a year ago to £31,300 for a single person, as a result of the cost of living crisis and changes in behaviour.
New calculations from Quilter, the wealth manager and financial adviser, suggest that for a single person to achieve that “moderate” lifestyle in retirement they must have a pension of pot of £459,000.
Andrew, a 60-year-old university lecturer from Hampshire, was able to save what initially looked like a sufficiently large pension to retire with, but now, like many others approaching retirement, he has doubts about whether it will be enough.
“This is my 40th year of work and my pension pot has not grown for a few years,” he said. “I have no confidence that it will grow enough in the future to keep pace with inflation.
“Furthermore, the UK economy is broken and the inevitable cuts to public services will force me to pay for things like health and care. I am keeping employed to put off the day when I will need to draw down my pension.”
While many men in Andrew’s age group will have similar worries about their living standards in retirement, for many women, the situation is worse. Research from the Pensions Policy Institute has found that women retiring at 67 – the new state pension age from 2026 – will have saved an average of £69,000 for retirement, compared with £205,000 for men.
Career gaps, caring responsibilities, childcare costs and lower earnings all contribute to the disparity, a problem that is exacerbated by the fact that women often live longer than men – on average by around seven years – meaning their retirement pots also need to last for longer.
Insufficient pension pots, but also outstanding mortgages that will not be paid off by the time people reach state pension age, are already causing the prospect of retirement to fade farther and farther away for many. Among them is 56-year-old Anna, a development manager from Anglesey who lives with her husband, teenage daughter and mother under one roof.
“Having had to buy a house at the age of 53 after a relationship split, and then having to take out a £35,000 loan against it recently to cover debt, means I will be paying my mortgage off until I’m 75, and my loan until I’m 76,” she said.
“I don’t have a large pension, because I didn’t start earning decent money until I was in my mid 30s, as I returned to university for a PhD, thinking it might improve my job prospects.
“The cost of living makes it almost impossible to save. I have a small amount invested in the stock market, but my hope of retiring at 65 is no longer feasible unless I win the lottery. In my mother’s generation, it was quite normal to retire at 60. I will be working until at least 75.”
Inflationary pressures will also prevent Jayne, 63, from Dorset, from retiring anytime soon.
Since her three grown-up children need more support than she had anticipated, she is unable to save as much for her retirement as she would like to.
“I expected them all to be financially independent, but the cost of living and student loans have put paid to that.
“One of our children is still living at home. Her zero-hours contract means she cannot live independently. My other daughter is a single parent who needs us to provide wraparound care – her minimum wage job in a care home means she won’t starve, but she is not secure.
“My oldest has just set up home in London. He and his partner are working full-time plus extra jobs, but they still need financial support due to high rents, electricity and gas bills.”
Jayne expects to work until age 70. “My biggest concern is that I won’t get a meaningful retirement as I need to keep supporting my family. I worry about the financial security of my kids and grandchildren – their student debt, the increasing cost of utilities, the state of our infrastructure to help vulnerable people.”
Tammy, 57, from Wales is among a number of people who said they had managed to save into private pensions, but had to delay retiring now as their pots had lost significant value in volatile stock markets struggling to recover due to high interest rates and subdued investment.
“My pension pot has lost over a third of its value in the last two to three years. The losses amount to circa £200k, which to me is not only a massive amount, but also funds I can ill afford to lose given my life expectancy,” said Tammy, who works in engineering.
If she started withdrawing from her pot now, or opted for an annuity, the losses would crystallise, meaning her invested money could not recover on the stock market, and she will no longer be able to pay into her pot, under current rules.
“I feel trapped,” Tammy said.
For 62-year-old John, a civil servant from Kent who is also having to support grown-up children for much longer than he thought he would, there appears to be only one solution left if he wants to retire eventually.
“We are considering emigrating to France soon, where my wife is from. I have an occupational pension, but we are still paying off our mortgage, and if I retired I wouldn’t have enough funds to keep paying it. This means either I would have to work for another 10 years, or we leave.
“Due to a mixed career marked by a lot of temp agency work, my wife has no pension, despite having worked as a teacher for 25 years.
“I have never been able to save anything else, despite my working continuously since 1985 and earning a decent salary. Selling the house and emigrating with my pension seems the only option, although I worry about leaving my daughter behind. I am luckier than many others, but I am angry that I cannot retire at a reasonable age or help my kids, who have no stable home.
“It’s painful: We’re coming to the end of our working lives and realise we never got off the treadmill, never got ahead.”
