Retirement age: when can you retire?

Sarah Coles
a mature man toasting.
a mature man toasting.

Good news everyone: you never have to retire. Legislation means that you cannot be forced to stop work because of your age, so you can work until the day you drop. It's a good job too because the state retirement age is on the rise - so you might not have any other choice. Fortunately all is not lost, because with the right planning you should be able to afford to stop work while you're still young enough to enjoy retirement. But just when will you be able to retire?

For most people the decision about when to retire depends on three things: when they leave work, when they get their state pension, and how much other income they will receive in retirement.

Retirement age

In theory there's no legal retirement age, because the requirement to stop work at the age of 65 (the default retirement age) was abolished in 2011. Companies can still force people to retire when they think they are no longer able to do their job, but this needs to be objectively justified, and cannot be done on age alone. In practice the average retirement age is now 65.

However, retirement isn't what it once was either. Even after people leave work and start claiming their occupational pension, some 36% of people then go on to do other regular work and only 29% of people will put their feet up for good.

State pension age

Since 2010 the state pension age has been rising. The first stage of this will see the state pension age for women rise to 65 by November 2018. After this date, the state pension age for both men and women will rise together, to reach 66 by October 2020, 67 by 2028 and 68 by 2036. After this, the government will link rises to longevity - calculated so that on average people will spend a third of their lives in retirement. If you want more details about these changes and what they mean it's worth having a look at our guide to state pension age.

If your state pension is a key part of your retirement planning, all the changes announced in recent years will have put a spanner in the works. And it'll come as absolutely no consolation to know that even if you change your plans to suit your new retirement age, they can just move the goalposts again - any time they like.

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Retirement: Why Your Parents Had It Easier Than You Will
Retirement: Why Your Parents Had It Easier Than You Will

Your income
For many people the question is actually dictated by when they can afford to retire, and that has a lot to do with the provisions they have made for their own retirement. Some people have generous final salary pensions from their employers, so can retire early and for good. Others have smaller defined contribution pensions either through the workplace or as personal pensions, and these are less likely to produce a generous income which will keep you in the manner to which you have become accustomed.

Unfortunately, according to Aegon, nine out of ten people's retirement plans are falling short of their expectations, so whatever provisions you have made, it's worth checking out its retire ready service, which will show you the income you can expect in retirement based on the plans you have in place. It then lets you play around with contribution levels and retirement ages until you find a balance you are happy with. This may mean making larger monthly contributions to your pension now in order to retire earlier, or keeping them as they are but planning for a later retirement.

Nowadays there's no such thing as a retirement age: it's when you choose to retire - or rather when you can afford to do so.

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