UK has shortest retirement in the EU

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Portrait of a retired senior couple calculating their personal finances at home

A new study has revealed that although we're living longer than ever, we have the shortest retirement of any other major country in the EU.

So how do we compare, and why are our retirements so short?

The study, by the OECD, found that British men spend 19.1 years in retirement (after retiring at the average age of 63.7), while British women spend 22.1 years (after retiring at an average age of 63.2) - partly as a consequence of the fact that they live longer and partly because at the moment women have the right to a state pension slightly earlier.

Longest retirements

The longest retirements in the study are enjoyed by French woman - who spend 27.4 years enjoying a life of leisure. They were followed by women in Belgium, Italy, Austria, Luxembourg, Greece and Slovenia. Among the men, those in Luxembourg have the longest retirements - at an average of 23.4 years.

The study looked at retirements for all the 34 OECD countries, and found that overall the average retirement age is 22.5 years. British men were mid-table for all OECD countries, and British women were 22nd. However, both men and women fared better than their US counterparts.

Why?

The problem isn't one of longevity. British men, for example, live far longer than French men, but have three and a half years fewer in retirement.

This may not be the case for much longer, because the study found that life expectancy was improving faster in other nations. Since 1970 life expectancy in the UK has risen 9.2 years - while in France it has increase 10 years.

However, for now, a significant part of the reason why we have shorter retirements is because the state pension currently kicks in for men at the age of 65, and although women receive their state pensions slightly earlier, it's still later than elsewhere in the EU.

The other piece of the jigsaw is that Brits haven't saved enough for their retirement, and now that they have the right to continue working beyond state pension age, many of them stay in the workplace for longer. Right now, one in three Brits works past what was once retirement age.

What will happen?

These issues are not going to go away - in fact they are going to get more extreme. The government has already established a timetable for the raising of the state pension age, and commentators are talking about a retirement age of at least 70 for young workers. By linking the state pension age to retirement, it means that as people live longer they stand no chance of having a longer retirement - they will just retire older.

Meanwhile, people are still not saving enough for their later years, so the pressure to work on past the state pension age will not abate. A recent survey by Saga found that a third of people over the age of 50 expect to delay retirement. In the last year alone there has been a 6% increase in the number of men who plan to work past the state pension age and a 16% increase in the number of women who do.

And there remains a growing percentage of the population who reach their mid-60's in good health and realise they are not ready to leave the workplace just yet. Roger Ramsden, chief executive of Saga Services, says: "Whilst some people delay retirement for financial reasons, we're finding an increasing number of people are staying in the workforce because they enjoy what they do, they like to keep their mind and body active and because they enjoy socialising with work colleagues."

However, that this doesn't necessarily mean the gap will continue to widen between elsewhere in the EU and Britain; because it's highly likely that financial pressures will start pushing retirement ages up in Europe too. It won't change the fact that we can expect to retire later and later, but it will mean that we're not faced with quite the same sense of injustice abut it.