Three fifths of workforce retire before state pension age

According to a study by Just Group, 62% of retired individuals discontinued their work before reaching the state pension age of 66.

According to the group’s countdown to retirement survey, it was discovered that 19% of over-55s who have retired stated that they did so right after they began to receive their state pension.

Additionally, an equivalent percentage (19 per cent) stated that they retired after they received the state pension.

The study discovered that men who have retired were prone to retire earlier before receiving the state pension, in contrast to women who have also retired.

More than a third (34%) of the individuals who retired prior to the eligibility for the state pension claimed that they also took out funds from their pension between the ages of 55 and when they ceased full-time employment, indicating a widespread practice of utilizing pension funds by many individuals who are still employed.

Stephen Lowe, who is the Director of Group Communications at Just Group, made a statement saying that most individuals tend to retire prior to qualifying for the state pension. This can result in a financial burden as they need to manage their finances until the state pension starts coming in.

As expected, our research also found that a considerable number of people have accessed their pension fund before reaching retirement age. About 28 percent of the respondents have withdrawn some amount of money from their pension plan, and this figure rose to over 33 percent for those who retired before the state pension age.

Following the publishing of the retirement income market update by the Financial Conduct Authority, there are concerns regarding the feasibility of income withdrawals.

The data indicates that 40% of income drawdown plans are being taken out at an annual rate of 8% or more, while 13% have seen regular withdrawals of 6.99%.

Lowe stated that most individuals employing income drawdown tactics withdraw over 6% annually, which is significantly greater than the suggested 'secure' rates of around 3-4%. This worsens worries regarding the duration of people's retirement revenue.

We suggest individuals who are nearing the age of accessing their pension, as well as those contemplating retirement when they have enough financial resources, to seek assistance prior to making decisions that cannot be undone.

This blog was first featured on our related publication, MoneyAge.