The 6th of March was a historic day in the state pension calendar. For the first time since the state pension was introduced in 1940, people are now receiving their state pension after age 65.
Whilst there is a gradual transition to the later retirement age, this will undoubtedly be painful for some people if it means they must consider working longer or living off less money in retirement. A delay of state pension for three months amounts to approximately £2,000 and a full year £8,546.20 in today’s money, so you can see the impact that this has on both the retiring individual and the government funding it.
Increases to the state pension age were always going to be unpopular with Labour voicing its opposition to rises beyond age 66. However, the government argument is that they are deemed necessary to stop the spiralling cost of social security payments. The Office for Budget Responsibility estimates the spending on state pension topped £96 billion in 2018/19.
These spiralling costs have a lot to do with the past increase in life expectancy. Male life expectancy has risen from 71 in 1980 to 79.2 today, whilst life expectancy at age 65 has increased from 13 years to 18.5 years now. Females are expected to live for 21 years in retirement.
Anyone looking to retire at age 65, will need to consider how they will fund their lifestyle as the state pension is paid later in life, whether they can afford to retire and when they can afford to retire.
If you are considering or planning for your retirement, we have a range of services that can assist you on your journey, to discuss your options contact us on 01642 661600 enquiries@prismaticwealth.co.uk
