‘Permanently poorer’
It is also bad for the over-50s’ finances, missing out on higher incomes now and on savings contributions for their later years.
Baroness Altmann, a former minister turned pensions campaigner, says age discrimination can make it hard for older workers to get new jobs, while retirement can be a “shock” for those used to the routines of work.
“I don’t think, for the long-term health of the economy and pensioners, that this is a move in a good direction. It is a dangerous development,” she says.
Early retirees could regret foregoing income and pension savings in the longer-term, she warns: “You have to look further out. They will be permanently poorer for the next 20 or 30 years of life.”
For those tempted to exit the workforce early, the road to retirement can be paved with pitfalls. Even those with sizeable pension pots risk running out of money decades before they die.
The average pension for someone approaching retirement sits just above £91,000, according to the Investing and Saving Alliance. It can be unlocked from the age of 55.
However, retirees who dip into their £91,000 that age to take £15,000 per year would run out of money within 12 years, assuming their investments grew by 4pc annually.
In this scenario a 67-year-old retiree would have already emptied their nest egg, barely sustaining them past state pension age at 66, according to analysis by stockbroker AJ Bell. However, delaying retirement by another decade would see the retiree through to age 83, with an income of £15,000.
Even a much bigger savings pot of £200,000 would only last 20 years if a 55-year-old took out £15,000 a year. If they waited until the age of 65 instead, the pension would last until they were 100.
