State pension age increases are forcing Britons to "work longer" but many Britons are in "danger" when it comes to saving for retirement, a new study from the University of Bath has warned.
Research, published in the Journal of Pension Economics and Finance, is sounding the alarm that workers are inadequately prepared for retirement as a result of failing to adjust to state pension changes.
The study is based on individual data from the United Kingdom Household Longitudinal Study examining the effects of the 2011 and 2014 Pension Acts, which led to the equalisation of the state pension age between men and women and raised it to 66 and 67 depending on when they were born.
Based on its findings, a one-year rise in the state pension age slashes the likelihood of retirement by 8.2 percentage points for men and 6.4 percentage points for women.
New research is suggesting Britons are not preparing enough for retirement due state pension age increases
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Furthermore, homeowners who report having an occupational pension are significantly more likely to retire once they reach State Pension age compared to renters without an occupational pension.
Notably, the study found that those approaching state pension age are delaying retirement, while those born in the 1960s and early 1970s are not adjusting their expected retirement age in line with policy.
This is particularly evident among women with an occupational pension, who review their expected age of retirement downward in response to a higher state pension age.
In lieu of this, many Britons are planning to retirement early and use either their workplace pension pot or work part-time to fund their retirement goals.
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The Longevity Centre has recommended raising the state pension age to 71 PAHowever, the University of Bath's researchers are warning that these assumptions are likely to be too optimistic.
According to the study, there is a clear gap between expected and actual retirement behaviour with younger workers expecting to retire before the state pension age whereas older workers revise their plans later.
Researchers note this often happens they are already close to retirement but this means there are less opportunities to bolster retirement savings down the line.Lead researcher
Dr Ricky Kanabar, a researchers from the Department of Social and Policy Sciences at the University of Bath said: "Ensuring individuals adequately prepare for retirement is of paramount importance due to increasing longevity and individuals being increasingly responsible to fund later life.
"Individuals’ expectations regarding the age at which they retire and their actual behaviour is therefore critical to determining retirement savings and income adequacy.
"We are seeing a pattern where some people are working longer due to rising state pension age, but younger cohorts, especially women with an occupational pension, are adjusting their expected age of retirement downward in response to policy changes.
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People preparing for retirement are concerned over what their savings will eventually look likePA"The danger is that such individuals are assuming they'll retire early and then abruptly have to change their retirement plans later in life.
"Overoptimism regarding retirement income and reliance on access to workplace pensions from their mid-50s could lead to prime-aged workers having to make unplanned changes to later-life employment to adequately fund retirement.
"Policymakers need to better engage these groups now to improve financial resilience in later life"
Currently, the state pension age is 66 years old and is expected to be raised to 67 from next year.