Planning For Your Retirement

Planning For Your Retirement

by Ian Youngman on 24 Jan, 2011

It used to be simple, most men retired at 65 and women at 60.These ages date back to when people expected about five years in retirement, but now many live into their late seventies and early eighties. Some people spend more years retired than they worked.

The government is increasing the ages that people begin getting a State Pension, and scrapping the default retirement age. The current law allows your employer to retire you at 65. This default retirement age is now the same for men and women. From 1 October 2011, employers will not be able to use the default retirement age to make you retire. These changes will mean that in most cases you can choose when to retire.

State Pension age is the earliest age you can get your State Pension. But you don’t have to retire at your State Pension age. Currently, the State Pension age for men is 65, while for women it will increase from 60 to 65 by November 2018. The State Pension age for both men and women will be 66 by April 2020. Current plans are for this to increase to 67 from 2036 and 68 by 2046, although the government wants to make these changes earlier.

To live comfortably in retirement, most people also have a personal or company pension. The sooner you start putting money into your own personal or company pension, the more time you have for it to build up. From 2012 there will be a new way of saving at work. In the new system your employer will automatically enrol you into a pension unless you are already in a suitable scheme.

You might choose to take out or contribute your own personal or company pension because:

  • You may get money back in tax relief
  • You may get additional contributions from your employer
  • You can lock your money away until you retire

For an individual planning their retirement there are two key things to consider; future income and flexibility. You could be retired for twenty or more years, so it is important to take time to get the planning right now.

Future income is important as it is inevitable that between now and retirement, and when you are a pensioner, that costs of fuel, food and utilities will continue to rise. So a pension that increases with inflation is better than a fixed one. The other essential is to ensure that the income is risk free and not dependent on wildly fluctuating investments. As you approach retirement, you may want to keep working longer, or may have to stop early because of poor health; so it is essential that any pension you buy now offers future flexibility.

In the current financial climate, you need to take responsibility for retirement planning by starting to save as early as possible and increasing the amounts you save into pensions year on year. Seeking early advice is vital to ensure you achieve the level of pension income you need.

About the Author

Ian Youngman


Ian Youngman is a writer and researcher specialising in insurance, healthcare and medical tourism. Formerly at management level in the insurance and banking industries, he was a co-founder of The General Insurance Market Research Association.