Downturn is putting retirement on hold

Around 28 per cent of people aged over 50 said they were being forced to delay retirement, while 21 per cent of people cut their savings levels during the past year, according to life insurer Liverpool Victoria.

The average person reduced the amount they are setting aside for retirement by 324 a month or 3,800 a year.

The sum is more than double the average of 137 a month that people approaching retirement had cut their savings by during the previous 12 months.

The group said the figure suggested people in their 50s and 60s were being forced to put their long-term financial security on hold while they coped with more immediate financial pressures.

Four out of 10 people also said they were approached by their children for financial help during the past year.

The research found that women were particularly hard hit, with 23 per cent reducing their retirement saving levels during the past year, cutting them by an average of 4,464 a year.

Just over a third of people aged over 50 said there needed to be a substantial economic recovery in the UK if they were going to be able to enjoy a comfortable retirement, rising to more than half of people aged over 60 who had not yet given up work.

Around 47 per cent of people said they were disappointed that they were going to be forced to work for longer, while 18 per cent said they felt angry.

Ray Chinn, head of pensions at Liverpool Victoria, said: "Britain's over-50s have already seen their pension pots damaged by the economic crisis, and now many appear to be diverting still more money away from retirement saving to deal with immediate pressures.

"We urge those already close to retirement not to give up on saving at such a crucial time."

Three-quarters of people who hoped to retire within five years said they were concerned about the rising cost of food and utilities, while 66 per cent said their biggest financial worry was the reduced returns they would earn on their savings and 63 per cent fretted about the economic downturn.

Only 41 per cent of people said they had a good idea how much they would have to live on when they retired, with 14 per cent admitting they would be totally reliant on the state to support them financially.

Minister for Pensions Steve Webb said: "Millions of people are not saving enough for their retirement and we cannot allow this situation to continue.

"We are committed to introducing automatic enrolment, which will give millions of people the chance to save into a workplace pension for the first time.

"We have also taken action to make the basic state pension fairer and more generous by linking it to the higher of earnings, prices or 2.5 per cent, to ensure it provides a good foundation for retirement."