People approaching retirement face a risk of reaching the point where they are too ill to work yet too young to receive their state pension.
A rise in the official pension age first to 66 and now 67 between 2026 and 2028 means people are expected to work longer.
While a further increase to 68 is also planned by the government, regardless of who wins the next election.
However, there is no guarantee that older workers will be well enough to keep working to that age, particularly if they are in physical jobs.
The situation has been identified as one of the “hidden horrors” facing Britons who need to think how to prepare to cope if they fall into this gap.
Figures from Hargreaves Lansdown show that, for example, a 40-year-old would need to start saving approximately £320 per month extra into their private pension now in order to provide an income equivalent to the state pension between the ages of 63 and 68.
It suggests they would need to collect an additional pot of around £120,000 to cover the cost of missing their state pension for these five years.
Somone who is 50 now will be able to retire at 67. However, it is estimated they would need to save £370 per month extra now to give them an income to cover any gap income due to illness between 63 and 67.
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown said: “We are living longer lives, but not necessarily healthier ones – which creates hidden horrors for our retirement planning.
“The state pension forms the very foundation of people’s retirement income. It currently stands at £11,502 per year for someone in receipt of the full amount.
“This would give a gap of almost £35,000 for someone needing to fill the three-year gap today – more if you add in the annual increases from the triple lock. This is an enormous chunk of money that many will struggle to find.”
She said the figures demonstrate the huge importance of saving what is possible into a pension to provide financial security and peace of mind.
People can draw an income from their Self Invested Personal Pension (SIPP) or workplace pension from the age of 55 (going up to 57 in 2028). She said this “could really help bridge the gap during those years’.
She said the introduction of auto-enrolment into workplace pensions means more people will provide a safety net for most.
The retirement expert continued: “These larger pensions over time will lead to better retirement incomes that should make up some of the gap.
“Let’s also not forget the role employer contributions as well as government tax relief can play in taking the sting out of these figures.
“There are employers who contribute more than auto-enrolment minimums and may also boost their contributions if you increase yours – the so-called employer match.
“It’s well worth checking to see if your employer does this as it can lead to significant uplift to your contributions without necessarily much extra coming from you.”
Savers can also benefit from pension tax relief, which provides a massive boost to people’s pension pots.
For every £80 a basic rate taxpayer contributes to their pension the government will boost it up to £100.
It increases for higher rate taxpayers who only need to contribute £60 to get the same £100 in the pot.
