‘Nothing is off the table’ State pension age could rise to 73 as Covid devastates finances – Express
With longer lifespans, the Government’s budget is “coming under stress” which will inevitably see many living longer with less. As inflation rates far outweigh interest for the foreseeable future, finance experts from Housebuyers4u share how to stop a pension pot from being eroded.
Paul Gibbens of Housebuyers4u shared: “It was previously assumed that those people retiring in the 2050s would need a pension age of 70.
“However, with Covid devastating the government finances this could push it further up to 72 or 73. Nothing is off the table.”
This is the unfortunate and unstable reality facing those who have just entered the workforce as they seem unable to estimate when they will actually retire.
Some think tanks, such as Iain Duncan Smith’s, have proposed that the state pension age should be pushed to 75 in order to provide a liveable retirement income.
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Alongside worries of how much state pension they might receive, if they end up with it at all, those who are saving substantially are often watching their cash get eroded by inflation.
The Bank of England has maintained its decision to keep the Base Rate at a record-breaking low whilst inflation is due to push well beyond the four percent mark during 2022.
Generally it is suggested savers set a budget based on living 20 years after they officially retire, and this would put the total pension pot currently needed for retirement at £314,000 for couples and £400,000 for individuals.
For a comfortable retirement in 2050, this equates to less than £3,000 in average monthly spending.
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However, the variables of inflation and interest rates essentially guarantees that these rates will not be the same for those that retire in 2050.
Thisismoney.co.uk shared that to maintain the current standard of average retirement living in the UK, retirees in 2050 will need 150 percent more than those currently in retirement.
This equates to an average monthly spending for a comfortable retirement in 2050 at just below £3,000.
In total, the average retirement in 2050 will cost £35,160 per year, meaning savers will need over £700,000 saved in order to retire.
Mr Gibbens commented: “New people entering the workforce really have to prepare themselves & understand retiring in their 60s is pretty much impossible now.”
He suggested those entering the workforce and the generations to follow should seek solid financial advice to give their retirement funds the best possible chance of meeting their needs later in life.
He noted that they will …….