If the UK’s state pension age rises, how sustainable is your career to work later in life?

Amidst growing fiscal challenges, the government is exploring various avenues to bolster tax revenues, including a proposal to increase the state pension retirement age to 68. This article examines the potential impact of such a policy change on individuals’ quality of life and career trajectories, as well as how to determine your personalised timeline for claiming your state pension.

Females at age 65 can now expect to spend almost 54% of their remaining life in a good state of health, increasing from 51% since 2011, according to the State Pension Age Review 2023. Males aged 65 have seen similar improvements, increasing from 54% to 56% over the same period. This trend is prevalent in each of the UK constituent countries. Yet, there could be more to this statistic than meets the eye.

How much quality of life do we have left?

Granted, this is not an easy topic to ponder. However, the above statistics essentially tell us about the proportion of remaining life that people at a certain age (65 in this case) can expect to live in good health. It highlights that this proportion has been increasing over time, which is a positive trend. However, when you boil it down, the actual time you can expect to be in good health in retirement is a flash in the pan.

Let’s assume the average life expectancy for females is 85 and the state retirement age increases to 68.

Now, let’s calculate:

• Remaining Life at Retirement: A female reaching the state retirement age of 68 would have 85 – 68 = 17 years of life remaining.
• Time in Good Health: The statistic tells us that females at 65 can expect to live 54% of their remaining life in good health. We can approximate this to also apply to females at 68. So, out of the 17 remaining years, she can expect to live approximately 17 * 0.54 = 9.18 years in good health.

In essence, this statistic suggests that a woman retiring at 68 today can expect to enjoy only 9.18 years of her retirement in good health. While this is just an illustrative example, the actual life expectancy and health outcomes can vary based on individual circumstances and healthcare advancements.

For some people, especially those who have had health scares, well in advance of retirement age, this statistic is an eye-opener.

A landmark study, published in The Lancet Public Health in July 2024, analysed data from US adults born between 1920 and 1999. The study, led by the American Cancer Society, found that incidence rates for 17 of 34 cancer types, including breast, pancreatic, and gastric cancers, increased in successively younger generations, with Generation X and Millennials experiencing the most significant increases. Additionally, mortality rates for several cancer types also rose.

“While some cancers have been declining in older people, various reports and studies have shown that cancer is on the rise in younger adults,” according to Yale Medicine.

Excluding cases of early-onset chronic illness, even if you maintain good health and mobility into your late 60s, you might only have nine active years of retirement. This is the period where you’ll likely have the energy and fitness to fully enjoy your retirement plans, such as travelling or spending quality time with your grandchildren. This doesn’t include the possibility of becoming a carer for elderly parents. Research indicates that around 2.4 million people in the UK provide unpaid care to older parents. Taking these factors into consideration, career planning as we head closer to retirement is more important than ever.

Time to rethink your career trajectory and “workstyle”?

Employers and companies that hire freelancers must start rethinking their adaptability to this phenomenon. Employees and freelancers equally have to start asking themselves questions. For example, if we are expected to work longer, will our current job or career today be possible in 10, 15 or 20 years?  For some, a resounding yes. For others, perhaps things might need to change.

“Sustainable work is about pacing oneself over a longer career,” according to Alex Hirst, co-author of Workstyle, a book dedicated to the concept of sustainable working. For example, he says in an interview with Age Co. that working a compressed schedule (e.g. three-day weeks) for a longer period might be more sustainable than a full-time schedule for a shorter period.

His business partner Lizzie Penny agrees: “If you’re going to be working until 85, you need to do it in a way that won’t burn you out.”

If you want to ease into semi-retirement or adopt a “workstyle” that enhances your well-being and continues to give employers or clients the services they need, then it is worth learning how you can get clients on board with your workstyle.

Figure out when you are eligible to claim your State Pension

It’s 2024 and say you’re 51 years old. Here’s how you can use the “State Pension age Review 2023” to figure out when you can claim your State Pension:

Find your State Pension age. First, look at the report’s tables to find the State Pension age for people born in your year. Let’s assume you were born in 1973. The report indicates your State Pension age will be 68.

Calculate the time remaining. Next, subtract your current age (51) from your State Pension age (68). This tells you that you need to wait another 17 years.

Determine your age at that time. Finally, add those 17 years to your current age of 51. This shows you’ll be 68 years old when you can claim your State Pension.

Keep in mind that future reviews could change the State Pension age, so stay informed about any updates that may affect you.

Reskilling in areas that you feel would be amenable to the lifestyle you want in your mid to late sixties now will help you ease into working in later life. Perhaps something you are naturally good at now, but could be enhanced with new certifications or perhaps a whole new career. It’s amazing what anyone can achieve in just one year so when you have the time, use it wisely to plan your next second act.

Relate articles:

One of the most liberating things about being a freelancer: you retire when and if you want to

Freelancing is the ideal soft landing for retirement

Self-Employed Women in UK Face Retirement Crisis

Why freelancers must reverse engineer their retirement plans and longevity

“Bulldozed by inflation”: retirement in the UK is becoming “impossible”

New report suggests only 1 in 5 self-employed headed for a comfortable retirement