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The average age of retirement: now rising again after the post-war fall

Data published by the Department for Work and Pensions (DWP) show that the average age of retirement for men is now 65 compared with 67 in 1950. By contrast the average retirement age for women is the same - 63 years – as it was back in 1950. Now, though, the prospect is that the average retirement age for both sexes will rise in the coming years.

The upward trend in retirement age is being driven by a various economic and social factors.

First, the rise in the state pension age (spa), which will move to 68 years for both sexes by 2039, is clearly acting as an economic incentive to work to a later age. Whilst the state pension should only provide one element of income in retirement the impact of its later payment in life will inevitably draw upwards the average age of retirement.

Second, the historically low level of annuities paid on pension funds - now half of what they were per pound of pension pot compared with 2006 - will force many to work into their late 60s to improve the income they can secure from their pension funds in retirement. Indeed the fact that the average expected lifespan of men and women aged 65 years is now 86 to 87 years makes it clear that we may need to work longer to secure sufficient funds for what will be, for many, a long retirement.

Additionally we need to reflect on the changing conditions in the work place and how these may make retirement less like a release from the challenges of working life. In the past retirement for many - particularly men - meant relief from physically demanding and mentally unrewarding toil in industrial jobs. These days such types of employment are not the norm. The result is that it is not physically demanding to work into older age. Indeed the intellectual challenges of continuing in work may be an attraction. Remember too that work is a social as well as an economic environment and this may be more attractive than a more isolated life in retirement.

Maybe whilst recognising the economic imperatives that may make us work well into out 60s we should embrace the positives that come from staying longer in the work environment.

Martin Upton

Director, True Potential PUFin

7th September 2017

About True Potential PUFin

True Potential PUFin is based at the Open University Business School in Milton Keynes, UK

True Potential PUFin is the first and only personal finance research centre in the UK that has an active teaching programme freely available to the public. Supported by the University’s excellence in delivering distance learning, the Centre is uniquely positioned to develop the public’s financial capability and to research the impact and effectiveness of its education programme.

 

 

 

 

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