Huge jumps in life expectancy have seen the costs of providing a state pension shoot up, with some pensioners spending more years in retirement than they spent paying National Insurance as workers, leaving the government with a massive debt and no one to pay for it.
So what is the answer?
Well for the government, they could bring in a Logan’s run style euthanasia project but that might lose them votes so it is unlikely. The other clear alternative is simply to raise the age of retirement. Lord Turner, when advising the last Labour Government recommended a steady increase in the state pension age to 68 for both men and women over the next four decades.
For the coalition government, hell bent on reducing the deficit 40 years was just too long and they introduced a link between State retirement and Life expectancy which could see it rise to 73 for today’s 33 year-olds and 77 for those just finishing their A-Levels.
In addition they have said that they would speed up the process, outlined In the Comprehensive Spending Review of October 2010, bringing forward increase in retirement age to 66 for both men and women by six years, and making that change effective from 2020. Worse still, the Chancellor said the state pension age will go up for both men and women from 2026.
How can I decide when to retire?
If you don’t like the government’s answer you’ll need to come up with an alternative plan that lets you decide when your are going to retire.
if you would like to take the first step towards a retirement plan contact Parsonage for a free inital consultation.