Brits putting retirement on hold as their pensions are too small

Around 38 per cent of Brits due to retire this year have put this on hold as their pensions would not be able to support them in their later years.

A survey by the Prudential found that 22 per cent of those delaying their retirement have done so because they cannot afford to stop working.

It is thought that two-fifths of those putting off their retirements will not stop working until they are at least 70 years old.

Vince Smith-Hughes, head of business development at the firm, said: "The only realistic option for those who want to avoid having to delay their planned retirement is to start saving as much as they can as early as they can.

"However, as inflation reaches 5.5 per cent and disposable incomes are reduced, Prudential's research shows that people are postponing retirement to either build up their pension pots further or simply to continue in a job that they enjoy."

It was also found that those living in the south west are the most likely to defer their retirement (44 per cent), while just 31 per cent of Scots have delayed their retirement plans.

Some pensioners could always consider equity release as a way of supplementing their pension income.

Anyone over the age of 55 who own their home are eligible for equity release, which means releasing the cash held in the property.

Advantages to equity release include:

• A tax-free cash lump sum is released from the equity built up in a property.
• The person can remain in their home for life.
• It can be used to pay off debts or to help create an income for life.

However, Christopher Friel, financial advisor at the firm, advised those considering equity release to seek advice from a professional as there are some risks involved.

These may include:

• There may be an impact on the benefits that the person obtains.

• Some schemes may make it harder for the consumer to move house.

Depending on the type of equity release chosen, there may be a risk of repossession if the person cannot keep up with their repayments.

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