How to achieve your desired retirement age as life expectancies increase

The government first introduced the State Pension in 1909, making it available to anybody who had lived in the UK for 20 years and was deemed to be of good character. Yet, you wouldn’t receive your payments until you were 70.

The State Pension Age fell to 65 after changes introduced in 1925, and remained at this level until the modern basic State Pension came into effect in 1948. Under the new rules, the payments were based on National Insurance contributions (NICs) and the State Pension Age was 60 for women and 65 for men.

Since then, the State Pension Age has increased and is now 66 for everybody. There are plans for a phased increase to 67 and eventually 68 for those born after 5 April 1960. The normal minimum pension age – the age at which you can typically access your personal pensions – will also change from 55 to 57 in 2028.

As life expectancies continue to increase, many people expect the average retirement age to rise further in the future. Indeed, according to Canada Life, 69% of UK adults believe that retiring in your 60s will become a thing of the past. Yet, these individuals might not have considered that a well-constructed financial plan could help them retire on their own terms.

Read on to learn why this might be the case and how you could still achieve your desired retirement age.

74% of people would be concerned about their quality of life if they lived to 100

As technology improves and many of us strive to make healthy lifestyle improvements, average life expectancies are likely to rise in the future.

According to Canada Life, the number of people aged 65 and above is predicted to increase by almost 40% between 2023 and 2050. This level of growth could increase to as much as 90% for those aged 80 and above.

Additionally, the number of centenarians – people living beyond 100 – is set to rise by 200% in the same period.

While longer life expectancies may be positive, 74% of UK adults agreed that if they were to live to 100, they would be concerned about their quality of life.

This is likely because, as life expectancies increase, you may live for longer in retirement and it could be harder to fund your desired lifestyle for this extended period.

Spending longer in work could be one solution to this problem, as you can build more wealth in your retirement pot. Also, you may not have to fund your lifestyle for as long if you retire later in life.

However, you might not want to extend your working life. In which case, you may need to explore ways to build more wealth and make your savings go further.

Here are three ways to achieve your desired retirement age despite increased life expectancies.

3 ways to achieve your desired retirement age

1. Review your desired retirement lifestyle

When planning for retirement, it’s important to consider the lifestyle you want and how much it is likely to cost. If you create a retirement budget, you can determine the approximate level of income you will need to generate each year to achieve your desired lifestyle.

You’ll also be able to see how many years your savings are likely to last if you maintain spending at this level. We can use cashflow planning to help you make accurate calculations.

If you’re concerned about increased life expectancy and how you might fund yourself in retirement, you may want to review your lifestyle. Making cutbacks in certain areas could mean that your retirement savings go further, and you may be more likely to achieve your chosen retirement age.

Conversely, you might decide you don’t want to adjust your lifestyle. In this case, you may need to explore ways to increase your retirement pot.

2. Search for lost pension pots

If you move jobs, you might start paying into a new pension scheme of your employer’s choosing. The savings in the pension from your previous job are still yours, but you may well no longer contribute to them. It’s easy to forget about these old pensions, especially if you move jobs several times.

That’s why PensionsAge reports that the total value of lost pension pots has increased by 60% to £31.1 billion since 2018. These pensions have an average value of £9,470.

As such, finding your lost pension savings could give you a valuable increase to your retirement pot. These extra funds might make it easier for you to achieve your desired retirement age.

You can use the government’s Pension Tracing Service or contact previous employers to find your old pensions. Once you track down the savings, you’ll need to decide whether to leave them where they are, move them into your current scheme, or start a new pension scheme.

We can discuss the different options with you and help you decide which is most suitable for your financial plan.

3. Consider increasing your pension contributions

Even a small increase in your pension contributions earlier in life could make a significant difference to the size of your retirement pot later. As a result, you might be able to fund your lifestyle for longer, meaning you’re more likely to retire at your desired age.

The Scottish Widows retirement calculator shows the difference a 1% increase to your contributions could make. For example, imagine a 50-year-old earning £60,000 a year and making a total pension contribution – including employer contributions – of 8%.

If they changed their contribution to 9% and retired at 65, their retirement pot could increase by:

£8,190 if they achieved lower growth
£11,800 if they achieved medium growth
£17,000 if they achieved high growth.

These figures assume annual management fees of 0.75%.

As you can see, a modest increase to your pension contributions could significantly increase the size of your retirement pot. These additional funds could mean that you can retire when planned, no matter how long you live.

Get in touch

We can review your financial plan to help you achieve your desired retirement age.

Please contact us at hello@ardentuk.com or call or WhatsApp us on 01904 655 330. As an award-winning financial advice company with advisers included in the 2024 VouchedFor Top Rated guide, you can be sure that we’re a bona fide company providing excellent advice and high-quality service.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

The Financial Conduct Authority does not regulate cashflow planning.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.

Your pension income could also be affected by the interest rates at the time you take your benefits. The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation, and regulation, which are subject to change in the future.