Retirement ages have reached record highs this year as working lives increase alongside life expectancies.
In 2025 the average age at which men and women stopped working was around 66 years and 65 years respectively, according to official statistics. The current state pension age is 66.
The number of 65-year-olds who are ‘economically inactive’, which includes people who have retired, has also fallen over the past decade, from 72 per cent in 2015 to 56 per cent this year.
As the government reviews the state pension age, employers are also adjusting to an ageing working population.
Research in 2024 from Aviva found that most employers surveyed (84 per cent) thought it was important to invest in training to help keep older workers for longer.
Investment strategies in retirement will also need to reflect the likelihood of people being less likely to suddenly and completely retire from full-time work.
A survey from Aegon last year found that three in 10 workers (28 per cent) planned to immediately stop working altogether and fully retire.
Meanwhile, four in 10 (40 per cent) planned to change the way they work, such as working part-time or on temporary contracts, before eventually retiring.
50%
Half of those surveyed aged 60+ want to retire gradually to keep mentally active.
“The advisory landscape is grappling with a fundamental shift in the nature of retirement,” says Michael Robinson, head of investment development at Aegon. “The traditional linear model of a 40-year career, followed by a ‘hard stop’ retirement, is in effect defunct.”
This structural change is presenting new challenges for traditional asset allocation models, says Robinson.
“An adviser’s challenge is no longer a simple binary switch from accumulation to decumulation.
Instead they must manage a portfolio for a client who may be simultaneously accumulating and decumulating, demanding growth while being acutely sensitive to ongoing market volatility.”
For some, the decision to gradually retire may come down to financial worries. But among workers over the age of 60, Aegon’s survey found that a half were motivated to keep mentally active. Two in five (42 per cent) said they enjoyed working.
Sunil Krishnan, head of multi-asset funds at Aviva Investors, says it is important to approach the transition to decumulation with “nuance”.
“Entering decumulation doesn’t mean growth should be entirely sacrificed, especially given the increasing longevity of retirement. Today, retirement is experienced in more varied and flexible ways.
“Multi-asset funds can ease the psychological shift into retirement by offering familiar structures and diversified risk-rated options, which help maintain confidence.”
Growth and income phases
With multi-asset investing offering a “versatile framework” for generating income and growing capital, Isabella Galliers-Pratt, an investment director at Rathbones, says this makes it particularly suitable to investors’ changing needs throughout their financial life cycle.