Ongoing challenges like inflation continue to affect retirement planning, but there are strategies you can use to stay on track and retire on your own terms
Savers are likely to have to delay their dream retirement age by five years as rising living costs put pressure on people’s ability to contribute to their pension pot.
Whilst the preferred retirement age of many Brits remains 62, they don’t expect to be able to give up work until 67, new research by Standard Life found.
This is up from 66 last year, widening the gap to five years, and increases to more than six years for renters and for those with no pension savings, which is becoming more common.
The scheduled rise in the state pension age from 66 to 67 between 2026 and 2028 is a possible factor in the shift to 67 but the report also shows that public awareness of the state pension age is low. Less than one in five correctly identified the current state pension age of 66.
The report showed that rising living costs – including rent, inflation and petrol prices – as well as uncertainty around the current economic environment are putting pressure on retirement planning and people’s outlook for the future.
It also revealed clear variations depending on where people live, the amount of pension savings they have, and whether or not they own their own home.
The widest gap between when people want to retire – and when they actually expect to – is 5.9 years in the North East followed by 5.3 years in Yorkshire and the Humber.
Only three in ten UK adults said they are currently living comfortably, and despite half worrying they aren’t saving enough for retirement, only 15 per cent have pension saving as one of their top financial priorities for the year.
When it comes to the state pension – £230.25 a week at the new full rate or £176.45 a week at the full basic rate – confidence is also low.
Less than a third think the triple lock will still be in place when they retire, and only a little over half think that the state pension will still be available for all by the time they retire, as it is currently.
This growing retirement expectation gap is shaping people’s outlook on later life, with over a third of working-age adults expecting to have a worse standard of living in retirement than they do currently, the study revealed.
Meanwhile, confidence about working later in life is limited – just less than half believe they could do their job, or one like it, by the time they are 70.
At the same time, many are being forced out of work earlier than planned due to caring responsibilities, health conditions, disabilities, skills gaps and ageism in recruitment – potentially compounding the challenge of the retirement expectation gap.
Catherine Foot, director of the Standard Life Centre for the Future of Retirement, said those facing a gap between their retirement hopes and expectations can take meaningful steps to narrow it with the right support.
She said, however, it isn’t only the pensions system that needs to adapt.
“Many people feel unable to continue working into their late 60s and beyond, so careers and workplaces must evolve if longer working lives are to be realistic and sustainable.
“That means embracing flexibility, bolstering support for carers, and encouraging non-linear career paths that allow people to retrain or step back and re-enter in later life.
“The growing retirement expectation gap highlights the need for a system that supports flexibility, resilience, and confidence in later life – underpinned by policies, employers and accessible advice that empowers people to achieve the retirement they hope for.”
Standard Life’s analysis also shows that those who engage with retirement planning tend to have a smaller retirement expectation gap.
Even a modest bump in monthly pension contributions can go a long way towards helping people retire when they want to, it said.
Who is most affected?
- Region: The retirement expectation gap is widest in the North East (5.9 years) and Yorkshire and the Humber (5.3 years), and is the narrowest in London (3.5 years) – creating a regional difference of 2.4 years. The East of England and the South East both have a retirement expectation gap of 5.3 years, and Scotland and Wales both face a 4.9 year gap. The West Midlands, at 4.7 years, has the second-narrowest gap.
- Housing status: Those who are renting face a gap of 6.1 years, compared to 5.2 years for homeowners, and just 2.4 years for outright owners.
- Income: For households with an annual income under £30,000, the gap is 6.2 years. It narrows to 5.1 years for those earning £30-50,000, to 4.6 years for those earning £50–100,000, and just two years for the highest earners.
- Pension type: Those with no pension savings face a 6.5-year gap, compared with 4.7 years for those with defined contribution (DC) pensions, 2.5 years for those with defined benefit (DB) pensions, and 2.1 years for those with personal pensions.
- Gender: Men face a 4.1 year gap, while women face a longer gap of 5.4 years.