Four in 10 over-50s expect to work until 70 or older due to insufficient pension savings and lingering debt, says Aviva

Millions of workers in their 50s have been forced to postpone their retirement by eight years due to a lack of pension savings and high levels of debt, according to a report from Aviva.

Forty per cent of people in their 50s expect to work until 70 or older, the insurer found. In a sign that the days of early retirement – in the private sector at least – are over, only 5% said they were financially capable of retiring in their 50s.

Aviva, one of Britain’s biggest pension providers, interviewed 500 companies and 2,000 employees. It said: “More than one in three (36%) private sector employees aged 50 and above now expect to retire at a later date than they had envisaged when they were 40. The average time gap between when these people thought they would retire versus when they think they will now retire is eight years.”

The collapse of generous final-salary-based pension schemes and their replacement with policies that rely on stock market performance to determine payouts is behind many of the retirement fears of private sector workers in their 50s.

The research found that almost half of people questioned said that they had not saved enough into their pension, and that the amount available through the state pension would not be enough. Lingering debts are also a continuing worry among today’s 50-year-olds, with many expecting to have to pay a mortgage well into their 60s.

If an individual wants to retire at 65 on two-thirds of the median pay in the UK, currently £27,600, and assuming they pick up a full state pension, they would need to save nearly £200,000 into their private pension. Yet the average amount saved by the over-45s is believed to be only about £55,000.

But the Aviva report also found that workers who stayed with their employer past 65 report higher levels of job satisfaction than their younger colleagues.

“Beyond their 50th birthday, almost two in three (64%) employees feel valued by their employer, and there is a significant jump in this percentage as people age. Compared with 55% of those aged 50-54, more than four in five (81%) of over-65s feel valued in the workplace,” the report found.

Few businesses are prepared for an ageing workforce who cannot retire because of financial pressures, according to the report. Less than one in five small or mid-sized firms said they had plans in place to cope with older workers.

Compared with 2013, when Aviva previously polled businesses on these questions, companies and employees are more confident about the UK’s economic outlook.

Three years ago, 45% of companies said they were underconfident about the economic outlook, and only 25% were favourable. But the figures have now switched to 40% confident and only 19% underconfident.