One in three will work into their 70s

FANCY spending lots of time with the grandchildren when you retire or plan on going on lots of overseas holidays? That could all remain a dream, according to new research out today. One in three Britons expects to work well into their 70s because they haven't got the financial security to retire earlier.

The figures reveal the extent of Britain's looming pensions crisis and underline the need for people to save more for their retirement.

The survey by Yorkshire Bank also found 52% fear financial hardship once they retire because the years of mortgage payments ahead are preventing them from saving sufficient funds for a comfortable retirement.

The research findings could lead to a two-tier society, one where pensioners lucky enough to retire with a pension linked to their final salary enjoy a wealthy retirement and those who don't scrape by in their twilight years.

The withdrawal of increasing numbers of final salary pension schemes and high house prices mean that some 60% of mortgage holders think they will have to work into their Seventies as this is the only way to build up a decent retirement fund.

According to Yorkshire Bank, this will shatter many people's dreams of holidays abroad and time spent with the grandchildren. One in three mortgage holders (36%) have given up all hope of an early retirement and, disturbingly, one in four (24%) have no financial retirement plan at all.

Gary Lumby, Yorkshire Bank's head of personal financial services, said: 'Our research has shown that, worryingly, one in four people currently have no financial retirement plan. Our research also shows that house price growth in recent years has resulted in many homeowners finding their mortgage commitment is leaving them with insufficient income to invest for their future.

'Affording to move up the property ladder has homeowners taking out loans that will see them repaying them up to, and in some cases beyond, retirement age, leaving them with little time to ramp up the money they can afford to plough into funding their retirement.'

Lumby added that people who find their mortgage too heavy a commitment should look to see whether they could switch to a deal with a cheaper rate. The research was conducted by TNS on behalf of Yorkshire Bank, on a sample of more than 1,000 people nationwide during December 2004.