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The State Pension isn’t enough. Invest now or work into your 80s

By 2020, the State Pension age for men and women will hit 66. From 2026, it will start rising to 67. Later, it will rise to 68. And it is likely to carry on rising as life expectancy does.

Working forever

Even if you are old enough to claim the State Pension, it isn’t enough to retire uncomfortably. That’s why growing numbers of Britons are working into their 70s and even their 80s, according to new research. Low savings rates, the death of gold-plated final salary pensions, and the rising cost of living are giving them no choice.

An incredible 71% of UK employees expect to work beyond their 65th birthday, according to Canada Life Group Insurance. That is a sharp increase from 61% in 2015 and the equivalent of 23m people, so there’s a good chance you might be one of them.

Of these, two in five believe they will work on at least until their 75th birthday, and possibly beyond that.

Cash doesn’t cut it

Seven in 10 blame the rising cost of living, while 62% put it down to the poor returns on their savings. Although they shouldn’t blame the stock market, because FTSE 100 dividend stocks have delivered a far superior return compared to cash in recent years. If you are saving for retirement, you need to start as early as you can. That way you have 30 or 40 years for your money to grow in value, and over such an extended timeframe, stocks should smash the returns on savings.

The problem is that too many people fail to make the necessary effort. Canada Life’s figures show that a third of those who intend to work beyond 65 admit their pension savings are insufficient. This rises to two in five 45-54 year-olds, which is traditionally the time when people start worrying about retirement and realise they have made a terrible mistake by failing to plan for it.

What a State!

One in four realise they can no longer rely on the State Pension and will have to work for longer to bolster their savings. That figure worries me. Do the other three in four believe it is enough? The new State Pension currently pays a maximum £8,767.20, which is £3,000 a year short of what the average pensioner needs to live on. In the pricier south-east of England, the shortfall is closer to £5,500 a year.

Working until you drop is never an attractive prospect. It becomes even more problematic if you fall seriously ill, as many people do in their 40s and 50s, and even more in their 60s and 70s.

Again, having a pot of money at your disposal will help.

Act now

Since 2011, employers have been barred from forcing their staff to retire at 65. People can go on and on, if they are up to the job. Many people like working, want to be active and enjoy the challenge. But wouldn’t it be better to have a choice?

The only way to give yourself that choice is to start investing TODAY. If you keep putting it off until tomorrow, you’ll never get there.

Who doesn’t want to achieve financial independence?

To never need to work again… Even if you’re like me, and you love what you do, financial independence is a goal most people would love to achieve. FREEDOM to work on whatever projects you like — or not to work at all! Download your free copy of “The Foolish Guide To Financial Independence And Retiring Early” to discover how you and your family could achieve greater financial security and a better quality of life. Click here to start now.

Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.