How does your planned retirement age compare?
Trying to decide what your retirement age might be can feel like plucking a number out of thin air. You know your retirement is going to happen but it’s difficult to know exactly when. And that can make planning for your future feel complicated.
New data1 from pensions advice specialist, Portafina, reveals that the majority of clients (43%) are planning to retire at the age of 67, anticipating the rise in the State Pension age planned by the government.
The data shows that the more than three quarters (84%) will only retire when they are able to claim the State Pension (aged 65 or over), suggesting a financial dependency on this income in order to retire comfortably.
The top five planned retirement ages, as revealed by Portafina’s data are:
|Age||% of people planning to retire|
When it comes to the planned retirement age of men vs women, men are planning on working for longer. Almost 7% of men stated that they are planning to retire aged 70, compared to just over 3% of women.
In line with this, one in five (20%) women plan to retire under the age of 65, compared to less than 16% of men.
Portafina advises that it is always a good idea to plan as far in advance as you can for your financial future, however there are a number of factors which might affect when you choose to retire.
Three key factors that might affect your planned retirement age are:
Greater pension flexibility.
People can now take an income from their personal pension as and when they like, from the age of 55. This opens-up the option of semi-retirement, however, taking too much too soon could mean you are never in a position to comfortably retire fully.
The rising State Pension age.
The State Pension age is currently 65 for both men and women, and is expected to rise to 67 in the future. If you have no alternative provisions for your retirement it is also worth considering whether receiving £168.602 a week from the State Pension will be enough for you to do the things you want when you are retired. As well as cover your general living costs.
The size of your private/ personal pension pot.
Each person is different when it comes to thinking about a comfortable future. Depending on what you want to do when you retire, you may need a larger sum, meaning working a few extra years could be beneficial in the long run. The longer your pension is invested the more it benefits from compound interest. And your contributions continue to receive tax relief during those extra years too.
Jamie Smith-Thompson, Managing Director at Portafina says,
“Deciding when to retire is a completely personal decision. There’s clearly a lot to consider and it can feel overwhelming to think about what life after work will look like. The good news is you can take a flexible approach to your retirement.
“It’s not necessarily as clear cut as it was for previous generations. Direct benefit schemes are thin on the ground which means many of us don’t have a guaranteed pension pot to turn to at retirement. That’s why it’s important to think carefully about your options and get regulated advice. It’s clear to see how compulsory workplace pension schemes via auto-enrolment could make a massive difference to people’s savings plans.”
To find out how you could maximise your retirement savings, click here.
2Full State Pension allowance as of April 2019