Increasing the retirement age won't matter to most of us

Portrait of mature female bodyboarder, Devon, UK

The age at which workplace and private pensions can be accessed is predicted to increase - but as we all live and work longer, does it matter?

Ask most people what the UK's retirement age is and they'll tell you it's 65 - because most people think that the age at which you can take your pensions is the same as the state pension age. However, they'd be wrong as you can actually start accessing your pension from age 55.

So in light of the relaxation of drawdown rules, you could in theory get your hands on your pension haul at the age of 55 - although as you will probably still be working at that age, the tax bill could be pretty high.

This access at 55 could very well be scuppered though as the government is thinking about increasing the retirement age and early estimates predict 63 could be the new 55.

There has been some disgruntlement about even the idea of this plan, as the government is accused of giving with one hand by allowing access to the entire pension, and taking with another by increasing the age at which you can get your hands on it.

But an increase in the retirement age does make sense. The state retirement age is already going up to 68 and could rise further over the next few years as we all live longer - so why wouldn't access to workplace and private pensions increase too?

That money is being stretched over possibly decades, so getting hold of it too early is of no benefit unless you are in a real financial hole - maybe with an interest-only mortgage that has come to term - and you need to get out of it.

Experts at Legal & General estimate that half of people do not actually retire when they reach the retirement age they requested when saving into a pension. This is probably because you are asked when you'd like to retire when you first start saving and have hopes of clocking off at 60 but then reality hits and you realise that your measly pension means 70 is a more realistic age.

It is only for those who can afford to retire at 55 and fund 30 years of retirement who will curse the increase in retirement age to 63. For the rest of us, retiring at 63 would be an absolute dream.
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