Three fifths of workforce retire before state pension age

Over three in five (62 per cent) retirees left the workforce before the state pension age of 66 years old, research by Just Group has found.

Research from the group’s countdown to retirement survey also revealed that a fifth (19 per cent) of retired over-55s said they retired as soon as they started to receive the state pension.

Furthermore, the same proportion (19 per cent) claimed they retired sometime after receiving the state pension.

The research found that male retirees were more likely to retirement before the state pension, compared to their female counterparts.

Over a third (34 per cent) of those who retired before they reached state pension age said they also withdrew money from their pension between the age of 55 and finishing full-time work, highlighting widespread use of pension cash by many people yet to give up work.

Just Group group communications director, Stephen Lowe, commented: "The majority of people are retiring before they reach state pension age, putting extra pressure on their retirement finances because they must bridge the income gap between stopping work and starting to receive the state pension.

"Unsurprisingly, our survey also discovered high levels of early pension access with nearly three in 10 (28 per cent) taking money out of their pension before retiring, rising to more than a third of those who stopped working before state pension age."

This comes after data from the Financial Conduct Authority’s retirement income market update raised concerns about the sustainability of income withdrawals.

This showed that two in five (40 per cent) of income drawdown plans were being withdrawn at an annual rate of 8 per cent or over, with 13 per cent seeing regular withdrawals of 6.99 per cent.

Lowe added: "The majority of people using income drawdown strategies are extracting more than 6 per cent a year, substantially higher than benchmark so-called ‘safe’ rates of closer to 3-4 per cent exacerbating concerns about how long people’s pension income will last.

"We would urge people approaching the age when they can access their pension, and those thinking about when they can afford to leave the workforce to seek help before making irreversible decisions."

This article originally appeared on our sister title, MoneyAge.

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