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What will retirement be like in the future?

How you can make the most of it 

3 minutes

Fifteen years from now, retirement will be radically different. Here's what to expect. 

  • Pensions will become much more flexible
  • The state pension age will increase
  • Plan ahead for a comfortable retirement

Start planning today for a comfortable retirement.

If you‘re in your 40s or 50s, retirement might seem a long way off.  But planning now could give you more choice about how and when you want to retire.

For example, you might not want to retire completely, choosing instead to work part-time, or you might want to withdraw part of your pension and dip into it later as and when you need it.


How old will I have to be to qualify for pension payments?

Historically, the state pension age for men was 65 and 60 for women. From 2020, both men and women's state pension age will be 66, increasing to 67 between 2026 and 2028, and then linked to life expectancy.

The government has said it will review the state pension age every five years after that.


Which changes to pension legislation will affect me?

For many people, the biggest change to pensions is that they're no longer forced to turn their pension cash into a fixed income for life, known as an annuity. Instead, they can dip into their pension fund and take out cash on an as-needs basis. 

The new rules allow them to take 100 per cent of their pension in cash, although this would land them with a potentially large tax bill.

Under the new rules, you're allowed to:

  • Take 25 percent of your fund tax-free and leave the rest invested
  • Withdraw 100 percent of your pension money if you wish (but watch out for tax)
  • Take some of your pension when you need it - known as 'income drawdown'
  • Buy an annuity - this guarantees a fixed income for life but is irreversible



How can I plan for the future?

'For anyone within 15 years of retirement, they need to think very carefully about what they wish for in the future when they intend to finish work,' says independent financial adviser Philip Pearson, director of P&P Invest. 

'Relying upon the State for your income in retirement is not an option, which most people would wish to look forward to,' he says.

'Take stock of where you are now financially and what your objectives are for your retirement. If interest rates remain low over the long term then this will have a devastating effect upon the amount of income available from a pension plan.' 

He suggests you set an ideal date when you wish to finish work, consider carefully how much income you'll need in today’s terms and review your existing savings and investments. It’s a good idea to review your plan each year.