Published On: Mon, Dec 16th, 2019

Retirement planning: UK workers plan to retire years before state pension age | Personal Finance | Finance


The state pension can be claimed by an eligible person once they have reached state pension age. In the past, this was 60 for women and 65 for men, however state pension age is rising. It reached 65 for women last November, and now, state pension age is rising at the same rate for both men and women.

The research found that the average worker of this age group who has an expected state pension age of 66 plans to wait until they are 63 to access their savings, and not retire from work until age 67.

According to the survey of 2,000 UK adults, of which 1,222 had a private pension, the average UK worker who has an expected state pension age of 67 plans to access their pension at 62, retiring from work two years later at 64.

Andrew Tully, technical director, Canada Life commented: “Working till you drop clearly doesn’t appeal to the average UK worker who has plans to slow down in their early 60s, typically retiring from work three years before their expected state pension age.

“This ambition is helped by an expectation that they will begin to access their private pensions before they retire, at age 62.

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“This creates a clear financial planning issue and people need to take positive steps early to mind the pension’s gap.”

Mr Tully went on to suggest that there are a number of steps a person can take in terms of tax planning and retirement planning.

He said: “Whether that be saving more, moderating their ambitions or considering working longer.

“Product choice can also play a role as a solution which ensures flexibility, for example a lower income while working, increasing as you move towards state pension and then dropping again can prove beneficial from a tax planning perspective.

“As people approach retirement, it’s clear from our research the financial reality kicks in.

The Retirement Living Standards are pitched at three levels, with these being named as “minimum, moderate, and comfortable”.

For a single person, the minimum lifestyle costs £10,200 per year, while it is £15,700 for a couple.

At this level, pensioners could expect to holiday in the UK, eat out about once per month, and do some affordable leisure activities about twice per week.

Meanwhile, the moderate lifestyle is £20,200 a year for singles and £29,100 for couples, while the comfortable level is estimated to cost £33,000 a year for singles and £47,500 for couples.

It may be that those living in London and the South East may need additional income due to the higher cost of living.



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