By Tom Philips at March 20, 2024

UK Retirement Stats 2024

Studies have shown that across the UK, the public have a very limited understanding of pensions.

In fact, a study carried out by the Institute of Fiscal Studies [1] showed that only 20% of individuals aged 25 to 64 could correctly guess how much the current full state pension was worth per week.

Moreso, over half of these individuals simply didn’t know. The rest thought that it was significantly less than it is [1].

With the cost of living continuing to rise, financial planning has become more important than ever.

As a result of this, behaviours are changing, with more people than ever (44%) planning on ‘semi-retiring’ at the age of 65, rather than taking a full retirement.

This allows individuals to draw down from their savings and pension, whilst topping up their income with part time work [2].

Not only is it important to pay into a pension, but it’s more important than ever to have a crystal-clear understanding of what your final pension amount might be, what your money is being invested in and what your state pension will be.

This is why our team at Equity Release Warehouse believe that it’s important to set the record state, with this helpful blog on UK Retirement Statistics.

Pension Statistics

Understanding how much you should have saved up in your pension is incredibly important when it comes to planning and understanding what you might need to put away each month in preparation.

According to Pension Bee, the average pension pot sits at around £17,379 across the UK, increasing slightly to £20,151 in London [3].

Their research found that there is a large gender gap when it comes to pension pot sizes. In fact, the gap sits at around 38%, with women having significantly less in their savings accounts by the time they come to retire [3].

Studies carried out by Pension Bee also found that pension pot sizes increase significantly the older you get.

Whilst the average pension pot sits at around £17,379 across the UK, this increases significantly once you hit 50 years old, as your pension and financial planning becomes more important to you.

In fact, for those 50 years and older, the average female pension pot sits at around £23,962 and £43,954 for men [3].

It is important to remember that this includes private pension pots, and not your state pension. The state pension is explained further below for you, along with some statistics.

State Pension Statistics

According to The Guardian, whilst the state pension age sits at 66 years old as of 2024, it is set to rise, according to pension specialists.

In fact, specialists argue that the state retirement age will rise to 67 years old by May 2026 and March 2028. From 2044, it is expected to rise to 68 years old [4].

Every year, the state pension rises. The rise is determined by something called ‘The Triple Lock.’

The ‘Triple Lock’ is a guarantee, set by the Government, which states that all payments will increase in line with either the consumer price index (inflation) or average earnings over the previous year (whichever is highest) [5].

This is great news for the public, as in September’s 2023 budget figures, average wages rose a lot quicker than inflation.

The Treasury has stated that The Triple Lock will remain in place for the 2023 / 2024 tax year, as well as the 2024 / 2025 tax year. Below is more information on how The Triple Lock works.

What is the triple lock?

According to the House of Commons library, The Triple Lock commitment from the Government means that pensioners will receive over an 8% increase in their state pension, starting from April 2024 [6].

It is also now a Government requirement to increase the basic state pension each year, in line with average earnings or inflation over 2.5% [6].

The Triple Lock has been around since 2011 and has been applied every year since then apart from the 2022 / 2023 tax year [6]. Whilst there has been calls

What does the triple lock do?

The Triple Lock ensures that the State Pension rate will increase year on year, in line with either inflation or earnings.

In the 2023 / 2024 tax year, The Triple Lock meant that the basic State pension was almost £800 a year more. This was approximately £300 more than if a ‘double lock’ were in place [6].

So, if you are currently receiving a state pension or are due to, The Triple Lock means that your spending power will not decrease over the course of your retirement years.

Whilst there is no guarantee that The Triple Lock will stay in place for the entire duration of your retirement, it has huge benefits for pensions as it stands.

If The Triple Lock were to end, then this would have a huge and immediate impact on people’s pension pots.

Whilst the Double Lock would more than likely take its place, this would mean that the state pension would still rise with inflation, but it would not ever exceed it.

If the Government were to ever put in place a single lock, then your pension amount would only ever follow earnings or CPI.

This means that the spending power of all pensioners would deteriorate over time. It is important to remember that the Government might choose to drop all locks, although this is unlikely to happen.

Average retirement age in the UK

The average UK retirement age across the UK sits at approximately 64 years old.

The Office for National Statistics found that this age will most likely increase, given the fact that more people than ever are working flexibly since the 2020 Covid-19 pandemic, meaning that more people than ever are happy to continue working, as long as they are able to work flexible hours or work from home [7].

Average retirement age by gender

There are a number of factors that will influence the age at which you retire. For example, gender plays a huge role in your retirement age.

Most men retire at 65 years old on average, whereas most women retire at 64 years old.

Women also typically require larger pension pots by the time they come to retire, as women typically tend to live longer than men do.

For example, the average life expectancy for men sits at around 84 years old, and for women it sits at 86 years old.

Average retirement age by region

A recent survey carried out by the Wealth and Assets Survey by the Office for National Statistics [7] found that the average age at which people retire differs dramatically depending on where you live in the UK.

For example, for those living in the Southwest of England, such as Devon or Cornwall, 19% of individuals should expect to work long into their 70s. This contrasts to just 10% of those living in the Northeast of England [8].

At the same time, 10% of individuals living in the East Midlands stop working before the age of 60 years old, compared to just 4% of those living in Wales or the South West of England [8].

What to expect when it comes to your pension in 2024

1. State pensions to rise in line with earnings

The state pension will rise in line with earnings in April 2024. The Office for National Statistics (ONS) found that wages increased by over 8% between May 2023 and July 2023.

This is the largest wage increase that the UK has seen since the Covid-19 pandemic [9]. If bonuses are included in this wage increase, then pensioners should expect to see their pensions rise by £13.30 per week.

This amounts to £169.50 a week. The full new state pension will rise by £17.35, meaning that individuals will receive £221.20 a week [9].

In addition to this, the Government is said to make another announcement on state pensions in regard to benefit rates.

2. A cut to lifetime allowances

Another change taking place in 2024 in regard to pensions includes the abolishment of lifetime allowances.

For those with large pension pots over a certain amount, then this is fantastic news. Whilst this will create huge ripple effects throughout the pension industry, it will have lots of long-term benefits.

According to Gov. UK, the current UK lifetime allowance sits at £1,073,100 [10]. The amount of tax you pay on your pension savings over this amount depends heavily on how the money is paid to you and what age you took your pension savings.

If you took out your pension prior to 6th April 2023, then you have to pay 55% (for lump sums) and 25% (if you receive your pension through pension payments or drawdown cash withdrawals) [10].

If you took your pension on or after the 6th April 2023, then you do not have to pay a lifetime allowance.

This is the case regardless of whether you took out one large lump sum or smaller withdrawals. Instead of a lifetime allowance, you will have to pay income tax on a portion or all of the lump sum you take out [10].

3. The lifetime pension will take shape

Another huge change to pensions in 2024 is the lifetime pension. The lifetime pension allows people the chance to ask their employer to pay a pension contribution, into a pension of their own choice.

This allows people the chance to have one large pension pot, rather than a long list of smaller pensions, as they move from job to job.

It is a known fact that more people than ever are now changing jobs more frequently. According to Indeed [11] and The Bureau of Labour Statistics [12], more people than ever are changing jobs on a frequent basis. Individuals who were born between 1957 and 1964 held on average just over 12 jobs during their lifetime [12], whereas this is set to almost double. It is important to note that this includes job changes, not career changes.

4. A rise in pensioner poverty

Whilst changes such as a cut to lifetime mortgages might benefit the wealthiest in society, a lot of people are still living in pension poverty.

In fact, according to a study carried out by Ageing Better [13], 1 in every 5 pensioners were living in poverty between 2019 and 2020, which was an increase by 200,000 from the previous year [13].

Unfortunately, this figure is only set to rise. Whilst the wealth of the richest people in society doubled between 2002 and 2018, that of the poorest fell by 20% or 30% [13].

More and more pensioners are also renting, rather than owning property. With that being said, pensioner poverty is a worrying trend.

5. Part-tirement

More and more people are opting for part-tirement, rather than fully retiring in their 60s or 70s.

In fact, 91% of all individuals who have simply reduced their working hours, rather than retiring fully, say that they are now much happier with their set up than they were or than what they believe they would be by retiring fully [14].

Not only will this give people more financial freedom, but it will also give people more purpose during their later years.

Life expectancy is continuing to rise and more people than ever are now expected to live beyond 100 years old.

Rather than being retired for 20 years, people are now more likely to be retired for 30 or 40 years. This means that people might end up being retired for almost a third of their life [14].

Subsequently, more people than ever are now said to be reassessing and re-evaluating their pension plans. Instead of gardening, holidays or making home improvements, more people are expected to opt for part time work.

This will not only go towards tackling the issue of loneliness and pensioner poverty, but keeping the mind active will also have a positive impact on rates of regressive diseases, such as Alzheimer’s or dementia. Here is more information on the best jobs for retirees.

How much pension should I expect to receive in 2024 & 2025?

As we know, in 2024, the state pension will rise in line with earnings, with the Office for National Statistics confirming that annual earnings are rising faster than inflation.

Pensioners should expect to see their pensions rise by £13.30, which amounts to £169.50 a week. The full new state pension will rise by £17.35, meaning that individuals will receive £221.20 a week [9].

The statistics – How much do I need to retire?

A lot of people will rely on the state pension to see them through their retirement. However, for those wishing to maintain a certain lifestyle throughout their retirement, they will rely on their own private pension.

How much you need in retirement will depend on what type of lifestyle you want, and how much you have been putting away year on year as part of your pension pot.

How much you save and have saved up in your retirement will depend on what is achievement and what is affordable for you.

To figure out what you think you need in order to live the lifestyle you want to live in retirement, first you need to think about how much you want to spend each year.

So, how much money do pensioners typically tend to spend each year in retirement?

According to one study [15], married couples tend to spend approximately £26,000 – £30,000 a year in retirement.

Whilst this depends on several different factors, you can work out your potential and projected spend by using a budget planner. Here is more information on how much you need to retire.

Care costs in later life

It is important to remember that during your retirement, you will most likely have to spend some of your savings on your care costs.

Unfortunately, these can take a significant amount of money from your savings.

According to Age UK, paying for residential care can cost hundreds of pounds a week, meaning that you might need support from your local Council to help to pay for these costs.

The Office for National Statistics [16] found that between March 2022 and February 2023, the number of people in care homes across the UK rose by 3.1%.

Of this percentage, 37% were funding their own care and paying for it using their own pension savings [16].

How to boost your pension pot

Whilst the state pension is one of the most generous across the developed world, it is incredibly important that you try to boost your pension pot where you can. If you are looking for ways to boost your pension pot, then there are a number of things that you can do.

Firstly, we would advise that you speak to a pension adviser about where your pension is currently being invested, to see if there are any better alternatives on the market.

Likewise, you can search for any missing or lost pension pots that you might have forgotten about.

Equity Release

Equity release is one way of boosting your pension savings in later life. Available to anyone aged 55 or over, you are able to release some equity from your home whilst being able to remain living in the home that you know and love.

You can release a significant amount, either in one large lump sum or through a number of smaller, more frequent payments (known as a drawdown plan).

You don’t have to repay the loan whilst you live. Instead, you are only expected to repay the amount you borrow once you pass away or move into a care home. Once this happens, your next of kin will sell your house and pay off the loan with the proceeds.

To qualify for equity release, you have to be aged 55 or over, own your own home in the UK worth at least £70,000 and have paid off the majority of your pre-existing mortgage.

Once you receive your funds, you get to spend them on whatever you want. You might choose that you simply want more savings during retirement, or you might choose to make some home improvements or treat your family to a holiday.