Retirement is undergoing a radical change, as increasing numbers of people expect to continue working well beyond the state pension age. The state pension age, once 65 for men and 60 for women, now stands at 66 for both and is set to rise to 67 by April 2028, with a further increase to 68 possibly starting as soon as 2037. Think tanks warn it will keep climbing thereafter, yet many are already working longer than that.
Working into retirement becoming the norm
The concept of a “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. Just one in six now expects to stop work completely and enter full retirement, while almost one in three expects to continue working well into later life.
This is not just about money. For many, it is a positive choice rather than a financial necessity, allowing them to maintain a better work-life balance. However, almost a quarter need to continue working because they have not saved enough.
Financial benefits of working longer
The findings came from Aegon UK’s Second 50 campaign. Kate Smith, the insurer’s head of pensions, 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.
The financial benefits of working beyond state pension age can be significant. Continuing to earn does not 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.
Planning for the future
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 a starting point for working out what you will 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 said.
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.”
Do not plan in isolation. “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 will have to work even longer just to afford a basic living standard in retirement, and as far as the retirement age is concerned, the only way is up.
