Retirement is undergoing a radical shift, with growing numbers of people expecting to continue working well beyond the state pension age. According to research from Aegon UK's Second 50 campaign, only one in six now expects to stop work completely and enter full retirement, while almost one in three plans to keep working into later life.
State pension age on the rise
The state pension age has already risen from 65 for men and 60 for women to 66 for both, and it is set to climb to 67 by April 2028. It will then rise again to 68, with the process possibly starting as soon as 2037. Think tanks warn it will keep climbing thereafter, but even as it nudges upwards, more people are already working longer than that.
The concept of the “hard stop” retirement is slowly being consigned to the past, as growing numbers plan to work part-time or pursue side hustles in retirement to make ends meet.
Choice or necessity?
This isn't just about money. For many, it's a positive choice rather than a financial necessity, allowing them to maintain a better work-life balance. Worryingly, though, almost a quarter need to continue working because they haven't saved enough.
Kate Smith, head of pensions at Aegon UK, said later life now involves moving into uncharted territory. “Retirement is no longer viewed as a single moment in time, instead, people are thinking about how work can fit alongside other priorities and aspirations.” Many people were considering reducing their hours, changing roles or finding ways to work for longer.
Financial benefits and planning
The financial benefits of working beyond state pension age can be significant. Continuing to earn doesn't just boost income; it also means you may be able to delay drawing your pension, build up further savings and give investments longer to grow. Smith said people should start by considering whether to stop work completely, phase down, change role or continue working in some capacity.
That should give you a starting point for working out what you'll need financially. “Create a simple snapshot of your workplace pensions, personal pensions, savings, investments and any other assets, so you can see what you have at a glance,” Smith said. Check your state pension forecast so you understand what you may receive and when. “Seeing everything clearly in one place can help make retirement feel less uncertain,” she added.
Think about how changes to work, health, caring responsibilities, relationships or housing could affect your plans. “Review your plans regularly rather than treating retirement as a one-off decision as your circumstances may change. Don’t plan in isolation, either. Talk to your partner, family or anyone who may depend on you financially or practically. Make sure joint plans reflect everyone’s needs.”
Finally, take small steps early. Increase pension contributions where you can and look for ways to fill gaps created by career breaks, part-time work or periods of lower saving. “Working later can make a positive difference to your retirement plans,” Smith said. If the state pension triple lock is scrapped, many of us will have to work even longer, just to afford a basic living standard in retirement. But as far as the retirement age is concerned, right now the only way is up.
