PensionBee, a leading online pension provider, has launched a new State Pension Age Calculator, designed to help savers evaluate if they can retire before they are eligible to receive the contributory benefit from the Department for Work and Pensions (DWP).
The age people can claim their State Pension has risen significantly since 2010 when the entitlement age was previously 60 for women and 65 for men. Currently 66, the State Pension age is due to increase again to 67 between 2026 and 2028, with a review to reconsider the rise to 68 scheduled within two years of the next Parliament.
However, a recent survey by PensionBee revealed that the 'ideal retirement age' for British workers is 60, despite this being some time before they would be able to receive their State Pension. Meanwhile, the healthy life expectancy - the number of years you can expect to live in good health - for workers in the UK is 63, suggesting a potential pension gap for people who might want or need to retire earlier than their State Pension age.
This ‘Pre-State Pension Gap’ is defined by PensionBee as the total amount of income someone would need to maintain a minimum, moderate or comfortable lifestyle in retirement before they're eligible to receive their State Pension.
PensionBee’s new tool enables users to calculate their own State Pension age, based on their date of birth, and the potential ‘Pre-State Pension Gap’ they may face if they plan to retire earlier than this.
For example, someone who wishes to retire at 60, assuming their State Pension age is 68 and they're retiring as a couple, would need to have saved enough to generate an income of £136,000 to support them during this eight-year gap, on top of what they need for the rest of their retirement.
When considering the average life expectancy for women (88) and men (85), a woman retiring at 60 in a couple would need a combined retirement income with her partner of £476,000 for her 28 years of expected retirement, to live a moderate lifestyle. Assuming she would receive the full State Pension from 68, £212,000 of this total would come from her State Pension payments and the remaining £264,000 would need to be generated by the couple’s workplace or personal pensions and other savings.
Becky O’Connor, Director of Public Affairs (VP) at PensionBee, said: “The dream of retiring early is alive. For many people, it is in fact necessary to give up work before they reach State Pension age, due to caring responsibilities, or illness.
“As the State Pension age rises, more and more people will find they either want or need to retire before they reach it. So identifying how much extra pension would be required to do so is an important part of retirement planning.”
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