You’ve probably been told many times before that it’s never too early to start thinking about your retirement. And the reason we all hear this so often is because it’s true. Planning for your future will help to ensure that you can continue to lead a comfortable life even though you are no longer working.
To figure out how much money you’ll need in retirement, first consider the type of lifestyle you’d like to lead in your later years and break down the typical costs of things like food, transport, clothing, holidays and presents for the grandchildren. Then, to find out whether you’ve set a realistic goal, work out how much of your salary you’ll be able to put into a retirement fund before you give up work for good.
To do this, you’ll need to know your retirement age. But is your retirement age the same age as your State Pension Age? And when you reach State Pension Age, will you be entitled to any additional income? If so, how much?
In this article, we’ll answer all these questions and more, so you can start making a realistic plan for your retirement.
Before 2011, the retirement age was 65, however, this no longer exists, meaning you can now work for as long as you want — or need — to.
The terms “State Pension Age” and “retirement age” are often used interchangeably, but the State Pension Age is the age at which you can receive the State Pension. It’s currently set at 66, increasing to 67 between the years 2026 and 2028 and is set to increase again between 2044 and 2046, to 68.
Continue reading to find out more about retirement and pensions.
What is the State Pension?
It’s sensible to start thinking about how you can be financially secure in retirement. A pension can give you that security. When you pay National Insurance, a part of this goes towards your entitlement to the State Pension, which is a pension scheme that’s been put in place by the UK government.
In April 2016, the basic State Pension was replaced by the new State Pension. If you are a woman who was born on or before 5th April 1953 or a man who was born on or before 5th April 1951, you will receive the basic State Pension once you reach State Pension Age. This is calculated by taking into account your earnings and whether you’ve claimed benefits, as well as your National Insurance contributions. If you are a man who was born on or after 6th April 1951 or a woman born on or after 6th April 1953, and you have at least ten years of National Insurance contributions, you can claim the new State Pension once you reach State Pension Age.
The State Pension Age is currently 66 for both men and women. However, this is likely to change as the years go on, so check the government’s website to find out when you can expect to be able to start claiming your State Pension. You can also use it to find out when you’ll qualify for free bus travel.
It’s worth reiterating that you don’t have to stop working just because you’ve reached State Pension Age, and you can receive your State Pension while continuing to work.
Does everyone in the UK get a State Pension?
Usually, you’ll need to have been paying National Insurance contributions for 30 years to get the full basic State Pension and ten years to qualify for the new State Pension.
If you have any gaps in your National Insurance record that could affect your entitlement to the State Pension, you may be able to make voluntary, or Class 3, contributions.
Even if you’re paying into a personal or workplace pension, you can still qualify for a State Pension.
How much is the UK State Pension?
If you reached State Pension Age before 6th April 2016 and paid all your National Insurance contributions, you will receive the basic State Pension of £141.85. The full new State Pension is £185.15 per week, which you’ll get as long as you’ve paid all your National Insurance contributions. You can check how much State Pension you could be entitled to here.
It’s worth noting that if you defer taking it or if you have over a certain amount of Additional State Pension, you may be entitled to more than the full State Pension. However, you could also end up getting less if you have to pay tax on it.
If you’re over State Pension Age and you’re on a low income, you may be entitled to Pension Credit, to help with your living costs.
How is the State Pension paid?
You can claim your State Pension in one of three ways:
- By calling the State Pension claim-line on 0800 731 7898
- By downloading a State Pension claim form and sending it off
- By registering on the government’s website
Your first payment will be within five weeks of reaching State Pension Age, and you’ll get a full payment every four weeks after that into a bank account of your choice.
When your pension is paid depends on your National Insurance number. The following table indicates which day you can expect to be paid according to the last two digits of your National Insurance number:
|Last two digits of your National Insurance number||Payment day|
|00 — 19||Monday|
|20 — 39||Tuesday|
|40 — 59||Wednesday|
|60 — 79||Thursday|
|80 — 99||Friday|
Note that you may be paid earlier if your pension day falls on a bank holiday.
Is the State Pension Age the same for everyone?
Not everyone’s State Pension Age will be the same.
Because of increased life expectancy in the UK, the population is starting to become composed of a disproportionate amount of elderly people. If the State Pension Age stayed the same, this would put an increasing amount of financial burden on those who are still in work.
As mentioned earlier, the State Pension Age is set to increase from 66 to 67 years between 2026 and 2028 and then increase again from 67 to 68 between 2044 and 2046. This applies to both men and women, and it will be a gradual increase.
If you were born on or after 6th April 1960, the tables below show when you can start claiming the State Pension.
How the State Pension Age will increase from 66 to 67 years
|Date of birth||State Pension Age|
|6th April 1960 — 5th May 1960||66 years and 1 month|
|6th May 1960 — 5th June 1960||66 years and 2 months|
|6th June 1960 — 5th July 1960||66 years and 3 months|
|6th July 1960 — 5th August 1960||66 years and 4 months|
|6th August 1960 — 5th September 1960||66 years and 5 months|
|6th September 1960 — 5th October 1960||66 years and 6 months|
|6th October 1960 — 5th November 1960||66 years and 7 months|
|6th November 1960 — 5th December 1960||66 years and 8 months|
|6th December 1960 — 5th January 1961||66 years and 9 months|
|6th January 1961 — 5th February 1961||66 years and 10 months|
|6th February 1961 — 5th March 1961||66 years and 11 months|
|6th March 1961 — 5th April 1977||67 years|
How the State Pension Age will increase from 67 to 68 years
|Date of birth||When you’ll reach State Pension Age|
|6th April 1977 — 5th May 1977||6th May 2044|
|6th May 1977 — 5th June 1977||6th July 2044|
|6th June 1977 — 5th July 1977||6th September 2044|
|6th July 1977 — 5th August 1977||6th November 2044|
|6th August 1977 — 5th September 1977||6th January 2045|
|6th September 1977 — 5th October 1977||6th March 2045|
|6th October 1977 — 5th November 1977||6th May 2045|
|6th November 1977 — 5th December 1977||6th July 2045|
|6th December 1977 — 5th January 1978||6th September 2045|
|6th January 1978 — 5th February 1978||6th November 2045|
|6th February 1978 — 5th March 1978||6th January 2046|
|6th March 1978 — 5th April 1978||6th March 2046|
|6th April 1978 onwards||68th birthday|
What age do most people retire?
The average retirement age in the UK differs depending on whether you are a man or a woman. For women, it’s just over 63, while for men, it’s nearly 65.
As time goes on, however, this average age is likely to increase due to rising debt in older age.
What are the rules for personal and workplace pensions?
In April 2015, the government introduced some new Pension Freedom rules, which give you more flexibility when it comes to accessing defined contribution pensions. The majority of workplace and personal pensions are defined contribution schemes.
Thanks to these new rules, you can now access these pensions from the age of 55 (even while you’re still working), and you can use the funds for a wider range of options.
You can now withdraw 25 per cent of your pension tax-free and use the rest to make further withdrawals (which are subject to Income Tax) or buy an annuity, which is a product that gives you an income that’s guaranteed for the rest of your life.
How does the UK’s retirement age compare to other countries?
While the State Pension Age in the UK is rising, there are other countries where the retirement age is currently higher:
|Iceland||67 (or 65 for public sector workers)|
Conversely, these are the countries with the lowest retirement ages:
|Yemen||48 (46 for women, 50 for men)|
|China||56 (50-55 for women, 60 for men)|
The terms “retirement age” and “State Pension Age” may be used interchangeably, but they have different meanings. The retirement age in the UK used to be 65, but in 2011, it was abolished, meaning employers no longer have the right to force you to stop working. The State Pension Age is the age at which you can receive the State Pension.
The State Pension Age is currently 66, but because of increased life expectancy in the UK, it’s set to increase to 67 between the years 2026 and 2028 and to 68 between 2044 and 2046. You can check the government’s website to find out when you can expect to reach State Pension Age and start claiming your State Pension.