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What is the UK Retirement Age?

There are really two answers to the question “What is the UK retirement age?”

The standard answer refers to the age at which you can access the state pension.  At present (2022) it’s currently set at 66 for men and women, and will rise to 67 by 2028. The second and more realistic answer is “it depends on your financial circumstances” – because according to Wikipedia retirement is simply “the action or fact of leaving one’s job and ceasing to work.”

What Is The Uk Retirement Age?

If you are relying solely on the UK state pension to fund your retirement lifestyle, you will need to live frugally – increasingly so with fuel costs rising and inflation eating into an income that is not going to increase dramatically.  Barring a political revolution, at least.

Financial security means having enough money to cover your routine expenses (rent or mortgage, gas and electric, council tax etc) and being able to fund emergencies like a new boiler or washing machine.  And of course you will need to replace your car at some point, so just being able to live from month to month will not allow a comfortable retired life.

So the real answer is – the UK retirement age is whatever you want it to be, providing you can afford not to work.

How much is the UK State Pension?

The official Goverment website gives the figure as £185.15 per week, which translates to £9627.80 per yeat.

The actual amount you get depends on your National Insurance record, and of course your tax position.

You can ask for a forecast of your state pension, and if you are approaching retirement age or just working out your post work finances, that’s an obvious place to start.

How much will I need to live on in retirement?

There are many answers to this question, and if it is possible to settle on how much money is required to live on in retirement today, it will be out of date tomorrow.  For the answer – see picture of the piece of string.

A Piece Of String

However, there have been some estimates of the income levels required to fund a specific lifestyle. Using only credible and respected sources:

Which Magazine

The respected consumer company Which have calculated the households with two people spent a shade under £2,170 a month, or around £26,000 a year, on average when they carried out research in 2021. They calculate that £18,000 is required to fund the basics, and the extra will allow for foreign holidays, restaurant dining and a few luxuries. 

Pensions and Lifetime Savings Association

The PLSA provided some detailed analysis from October 2021.  They estimated that for a couple aspiring to a moderate lifestyle, £30,600 would be required.  That would involve running a 3 year old car and allow for a foreign holiday for a couple of weeks per year.  Remember the state pension is £9627.80, so a couple could double that if both partners have a full national insurance record.  But that still just creeps above the minimum level

Income Per Annum For Lifestyle

How to fund retirement - plan!

According to Standard Life, just 27% of us conducted ” a great deal of planning/thinking” about funding retirement, and 73% “did little or no planning”.  I can recognise the temptation of underpaying pension contributions in order to buy food, fuel etc. but an awful lot of people are going to be poor in retirement – they just don’t know it yet.

AgeUK provide a helpful pension calculator, which can “give you an estimate of the income you’ll get when you retire”.  Of course, to be helpful you would need to be reading this blog in your 20s and 30s, which I feel is unlikely! 

There is also an assumption that, once the basic household expenses have been covered, the extra disposable income will be saved to fund a future lifestyle at the expense of having fun and/or comfort today.  The temptation to buy (or rent) a better car or opt for a more exotic holiday must be difficult to resist.


Workplace pension schemes

A workplace pension is “a way of saving for your retirement that’s arranged by your employer”.  Currently they are a total contribution of 8% with at least a 3% employer contribution.  They do have the great benefit of removing the opportunity cost temptation mentioned above.

Employer pensions have been the bedrock of retirement funding for generations, but recent reforms have made them less generous, and there have been many pension scandals where the fund is underresourced or the employer ceases trading.

Additionally, the 2020s workforce is more fragmented – many are self-employed and most people move around from job to job in their lifetime.  Keeping track of small pension pots requires diligence, or money.


Pension scams

The Pension Regulator warns of scams in this lucrative market.  Fraudsters promise high returns and low risk but, in reality, pension savers that are scammed are usually left with nothing.

When savers realise they’ve been scammed, it can be devastating – many lose their life savings. Once the money is gone, it’s almost impossible to get it back.

They publish a helpful PDF – how to avoid a pension scam, which is worth a read.  Ideally, before you lose your pension.

Conclusion - "what is the UK retirement age? "

If you ar googling “what is the UK retirement age? ” you must be thinking that retirement looms on your horizon.  If that is the case you should at least be armed with the facts and figures about your income and potential lifestyle.  And if you are young enough to affect that lifestyle by investing for your golden years that is something to consider. Because a penniless retirement will not be the most joyous time of your life.