What is the retirement age in the UK?

Wondering what the retirement age in the UK is? Here’s a look at how it works.

Edward Sheldon, CFA

Based in London, Edward is a freelance investment writer/analyst who has clients all over the world. Prior to launching his own investment writing business in 2017, he spent 15 years working in private wealth management and institutional asset management, both in the UK and in Australia. Edward is a passionate investor himself and manages his own global equity portfolio. This contains a mix of large-cap growth stocks, large-cap dividend stocks, and small-cap growth stocks. His stock-picking strategy combines ‘growth’, ‘quality’, and ‘thematic’ approaches. Edward holds a Commerce degree from the University of Melbourne, as well as the Investment Management Certificate (IMC) and the Chartered Financial Analyst (CFA) qualification. You can find him on Twitter @EdwardSheldon7

Published 6 September, 2019 7:46 am BST

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

I’d love to tell you that there’s a simple answer to the question: ‘what is the retirement age in the UK?’ However, unfortunately, the answer is a little complicated because it depends on how you plan to fund your retirement. For example, those who plan to retire on the State Pension face a very different situation to those who have built up their own savings and investments for retirement. With that in mind, here’s a closer look at how the retirement age in the UK works.

State Pension age

If you’re planning to rely on State Pension income in retirement, you’ll have to wait until State Pension age before you can retire.

Now, in the recent past, the State Pension age was 65 for men and 60 for women. However, the age at which you can claim the State Pension is gradually increasing and is set to rise to 67 for both men and women by 2028. It will then rise to 68 between 2044 and 2046. The rising State Pension age certainly makes the situation a little confusing.

The best way to check your own personal State Pension age is to use the government’s ‘Check your State Pension age’ calculator. Simply plug in your date of birth, and the website will tell you the age at which you can claim the State Pension.

Workplace pension

If you have a substantial sum of money in a workplace pension you could potentially retire way earlier than State Pension age as most workplace pensions allow you to take a lump sum from the age of 55. However, it’s worth checking this with your pension provider as some pension schemes don’t allow you to access your money until you turn 60 or 65. Another thing to bear in mind here is that while you may be able to access your pension savings at 55, you can only take 25% of your workplace pension pot as a tax-free lump sum.

SIPP

Similarly, if you have savings in a SIPP (Self-Invested Personal Pension), you can access this money at 55, so you could potentially retire way earlier than State Pension age if you have a decent sum of money in your SIPP. However, like a workplace pension, you can only take 25% of the pension pot as a tax-free lump sum.

Financial independence

Finally, it’s worth noting that if you have built up substantial savings or investments outside of your retirement accounts (in a Stocks and Shares ISA for example) to the extent that you no longer need to work to support your lifestyle (this is often referred to as ‘financial independence’), then there is no ‘retirement age’. In this scenario, you can retire when you want to, whether that’s at age 60, 55, 50, or even earlier.

For example, if you have built up a portfolio of dividend stocks in a Stocks and Shares ISA that pays you a regular tax-free income stream that covers all your expenses, there’s nothing to stop you retiring whenever you want to. Forget waiting until your late 60s for the State Pension, you could retire at 50.

It’s this kind of financial freedom that is creating a lot of interest in shares and investment funds, as these kinds of assets can boost your retirement savings significantly, especially if they’re held in a tax-efficient account.