The retirement age gap and other paradoxes

Question 1: At what age would you like to retire?

Question 2: At what age do you think you will be able to retire?

If your answers to those two questions are different, then you are not alone. The report found that the average answer to question 1 was 62.3 years old, while for question 2 it was 67.0, a gap of nearly half a decade. The difference was just 0.9 years for baby boomers – those closest to retirement age – and widest at 6 years for millennials (born early 1980s to late 1990s). Perhaps surprisingly, Generation Z (born 1997–2012), had both the earliest aspirational retirement age (60.1) and the earliest expected age (65.0).

Gen Z’s expected retirement age of 65 – five years below the baby boomers’ expectation – seems optimistic at best. At the earliest, Gen Z will not reach the current state pension age (SPA) of 66 until 2063. The SPA is set to rise to 67 by 2028, and this summer the government set in train a review for the move to SPA 68 – the law currently has the change set for 2046–48. So, it is possible that further reviews mean some of Gen Z may not start to receive their state pension until age 70.

The responses to another question in the report, about working beyond SPA, further muddied the waters of Gen Z’s aspirations about retirement age. Just over half of people aged between 18 and 34 in employment agreed with the statement “I’m expecting to have to continue to work beyond my State Pension Age”.

One possible way to square these contradictions can be found in Gen Z’s pessimism about the future of the state pension. 45% of Gen Z said that they do not expect the state pension will be available for everyone by the time they reach their SPA.

Gen Z’s apparent retirement inconsistency is not unusual. If you are unsure how your retirement plans fit together, the best answer to your questions is to take advice.

The value of your investment and the income from it can fall as well as rise and investors may not get back what they originally invested.