There was a time when your 65th birthday was a double cause of celebration. Not only were you another year older, you’d finally reached the milestone age where you could retire.
But over the last two decades, 65 for many is no longer the moment you stop work – instead, the countdown to retiring is stretching further into the distance with around 11.5% of UK adults now working beyond their 65th birthday – compared to just 5.2% in 2000.
72 is new 65
According to January 2024 research by Canada Life, half of Britons (49%) who are not already retired plan to work beyond the age they will receive their state pension – equivalent to 19.2 million – and on average, people expect to work until they’re 72.
Of those expecting a prolonged working life, 36% say it will be because their pension won’t be sufficient enough to cover their day-to-to-day expenses. Of this same group, those closer to retirement are even more acutely concerned about this with 52% of over 55s worried they won’t be able to afford to stop working at state pension age.
There’s plenty of reasons why working into your 70s is not an appealing prospect – with the impact on your health a chief fear.
A third of us are worried about our health deteriorating because of having to work longer, while 24% fear retiring later will mean they don’t get to spend enough quality time with their family.
An unavoidable option
In February 2024, the International Longevity Centre published research suggested the state pension age might need to rise to 71 for anyone born after April 1970. They cite a rise in life expectancy and fall in birth rates as the key reasons.
As it stands, state pension age is set to rise to 67 between May 2026 and March 2028 while from 2044, it’s expected to rise to 68. This new research suggests these planned rises might not be significant enough.
As a result of the government’s triple lock pension, the state pension is scheduled to rise each year by either 2.5%, the average UK wage growth, or the rate of inflation, whichever is higher – state pensions will increase by 8.5% in April 2024.
However, how long the triple lock pension will remain in place is unknown.
Put your retirement in your own hands
If you are worried about your own future and ability to retire, let’s talk about what you can do about it. If you’re working right now, saving for retirement should be one of your key long-term financial priorities.
It’s all very well to have a pension, but if you’re not paying in enough, or not thinking about how it’s invested, you might later discover you’re not building up sufficient savings for your retirement and may end up working longer.
Providing you have the right level of earnings, you can now pay up to £60,000 into a pension each year. Even better, you can get tax relief of at least 20% (40% or 45% if you’re a higher or additional rate taxpayer and you claim for it).
Building your money for retirement takes careful consideration – and with so much at stake, financial advice is strongly recommended. An adviser can review your current arrangements and give you a clear idea of what you’re on track to receive and for how long.
With all this information they’ll be able to devise a plan based on your circumstances and goals. It will give you a clear idea of when you can retire, giving you greater confidence. You might discover, for example, you don’t need to wait until state pension age to retire and can start enjoying the benefits of a retired lifestyle when it suits you.