Savers who have not put away enough for their retirement will have to think in terms of catch-up.
And generations following on will certainly face major challenges.
High housing costs, university funding repayments and a host of other burdens make it difficult for young people to make proper pension provision.
Some things are beginning to make a difference – the introduction of workplace pensions is one.
There is more optimism surrounding the new state pension system and the £155 per week on the basis of a full National Insurance history.
Getting real is crucial when seeking to provide for your old age.
The typical UK household vastly underestimates their retirement needs, according to ‘The Cost of Tomorrow’ report from financial planning and investment management group Tilney.
An average household will spend £26,500 every year between 65 and 75, and will need a post-tax income of £14,100 over and above the combined state pension of £12,407 to sustain these spending levels.
Andy Cowan, head of financial planning at Tilney said: “While some of today’s retirees are in a position to achieve their desired lifestyle, those coming behind face significant pressures on retirement income and much greater uncertainty because of the demise of traditional, predictable final salary pensions.
“The key to enjoying a comfortable or even prosperous lifestyle in later life is to plan ahead and to start investing as early as possible. It is important to invest in the right places and minimise the burden of tax. Taking advice on how to do this effectively is vital.”
Perhaps the best way of playing catch-up is to delay taking your retirement for five years.
A 65 year old could increase their monthly income from £457 to £771 per month if they defer and keep contributing to their personal or workplace pension until age 70.
Aegon research showed that on average those between ages 55 and 64 contributing to a pension were paying £355 a month and had a fund of £105,496. That pot could increase to £151,884 if they delay.
In the last 30 years the employment rate for people aged 65 and over has doubled from 4.9 per cent to 10.2 per cent.
A quarter of working age people now expect to continue full-time for as long as they are able and a further quarter expect to work on past state pension age on a part time basis. The younger working population are particularly comfortable with the idea that work will not end at age 65. Nearly a third of millennials expect they will work full-time for as long as they are able, 27 per cent will continue part time.
Of course this is not just down to money; much of it is about keeping the brain cells functioning. Just go into B&Q who have targeted the more mature person and look at the staff age profiles there. It is hugely instructive.
Steven Cameron, pensions director at Aegon, said: “The positive news or silver lining as some may see it is that working a few years longer and keeping saving in a pension can dramatically improve retirement incomes. This is a result of the triple boost of continued investment growth on the pension fund, further contributions being added and ultimately fewer years to spread the fund over.
“For those early on in their working lives, starting saving as soon as possible is key. But we can’t turn back time and those approaching traditional retirement age with less than they might wish for still have choices.”
So not all doom and gloom – you may be able to stave off a poverty retirement yet!