11 Nov

75 Going On 65 – Will We Soon Retire A Decade Later?


The faster our ageing population grows, the quicker changes to our retirement age will come about. So what age will we retire and why…


It is so much harder to retire than it used to be. There’s no doubting that.

But why is it now harder to retire at 65?

There are several reasons why it is more difficult to retire today than it was just a couple of decades ago, from the recession to low annuity rates and more. All in all, an overall trend is being created - that of later and later retirement.

We already discussed the growing trend of workers reducing their hours at 65 rather than outright retiring in an earlier blog post and this is all part of a move towards a retirement age that is later than any of us expected.

The steady increases in the state pension age are a major part of the growing realisation that we’ll retire later. The UK state pension age will increase to 66 between November 2018 and October 2020, while it will go up to 67 by 2036 and 68 by 2046 at the latest. Although unpopular, these increases appear to be necessary.

As Warren Sanderson, an Economics Professor, and Sergei Scherbov, the Deputy Director of World Population Program at International Institute for Applied Systems Analysis, explain: “A continuation of current demographic trends suggests that 75-year-olds in the future could have the same remaining life expectancy, health, and other characteristics of today’s 65-year-olds. When we realise this, it seems appropriate to modify the normal pension age in order to not encumber younger generations with an ever heavier burden of supporting their elders.”  

So it seems fair to raise the state pension age and, fair or not, that is exactly what will happen. Yet it isn’t just increases in the state pension age that are pushing up the age at which we retire, but also a general shortfall in private pension funds.

On the whole, UK workers aren’t saving enough privately and are compensating for this by working later. The introduction of automatic enrolment should begin to encourage earlier savings with 22-year-olds now automatically enrolled to a pension. Whether it will be enough or not remains to be seen.


Who should be worried?

Nobody will be thrilled to see that they are likely to work longer, but few will be too devastated. It’s no surprise that we will be working longer, but the figure of 75 found in the recent report ‘Is 75 the new 65?’ may be a little higher than most people expected.So it’s unlikely that too many people will be that upset, but those that are and want to do all they can to retire earlier can probably do so with a bit of planning and retirement planning advice could help that.

On the other hand, employers will be concerned. That same ‘Is 75 the new 65?’ report highlighted concerns among employers as to how they will manage an older workforce and how they will cope with any management problems that may cause. Employee benefits schemes are also unlikely to be suited to a workforce in their 60s and 70s and this will also cause HR departments a headache. There will be a need to look into employee benefits schemes and to analyse and review how they work for an older workforce.

Another group which could and should be worried is that of manual workers. A large part of the reason why more and more of us are able to work and live longer is because a larger proportion of us work in offices. There is much less physical strain with going to work than there used to be and over decades of work, the difference is noticeable. Yet for those working long tough hours every day for all their working years, a few extra years of work is not something to be taken lightly.

Paul Kenny of GMB Union has said: "The government knows that manual workers in the industrial regions of the UK do not enjoy anything like the same life expectancy as professionals or other classes or employees. To force someone who has done a lifetime of toil on building sites, in farms or in factories to work until they are 66 is completely unacceptable."


So all in all, a higher retirement age isn’t much of surprise and won’t be too big an issue for most of us. For some, however, this isn’t a great sign at all. And only time will tell whether the retirement age actually does reach 75, but the closer it gets the more difficult retiring could become.

Photo credit goes to aag_photos

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