The State pension - isn't it basic?
Posted on Oct 04, 2019
- Top three tips for… deposit savings
- Is care leaving you confused?
- The State pension - isn't it basic?
Since June this year, the oldest person in Britain now resides in Kent. Aged 111 years, Dorothy Payne was born on 5 August 1907 and lives in Sevenoaks. She took on the ‘title’ after the death of Grace Jones from Broadway, Worcestershire, who passed away at the age of 112. Only a generation ago, living to 90 was an accomplishment and to 100 was virtually unheard of.
According to the Office for National Statistics (ONS) there were 13,170 centenarians in the UK in 2018. This was actually a decrease of 5 per cent over the 2017 but this follows an expected downward trend resulting from the low number of births during the First World War.
While women have historically had longer life expectancies than men – meaning there have been more women than men living to older ages – this is changing. The gap between female and male life expectancy has been reducing over the years, owing to male life expectancy increasing at a faster rate than female life expectancy over many decades. Again, according to ONS figures, the ratio of females to males aged 90 years and over continues to narrow, from a high of 4.4 females to males in 1990 to half this at 2.2 in 2018.
We cannot escape the fact that we are getting older and living longer…
Currently one-in-five people in the UK is aged 65 years or over but, according to the ONS this is projected to be one-in-four by 2050. By 2068, the ONS estimates that there will be an additional 8.2 million people aged 65 years or over.
This puts enormous pressure on both State pension costs and care provision. As a result, the State pension age is set to increase to 68 between 2037 and 2039. However, as we reported in an earlier blog, the Centre for Social Justice (CSJ) argues that the State pension age should rise to 70 by 2028 and to 75 by 2035. The think tank explained that this would boost the economy by keeping older generations in work for longer.
While the government has distanced itself from talk of taking the State pension age into the 70s, it does seem inevitable that there will be further rises.
It is interesting to look back and see that the State pension was never meant to be somebody’s sole way of financing their latter years; in fact, it is referred to as the ‘basic State pension’, so should arguably just be a starting point. Nowadays, there are very few of us who could continue to live the life we are enjoying by just relying on the State pension.
The discussion, therefore, should be around encouraging people to take responsibility for their finances in later life and regard the State pension for what it is, ‘basic’. And, with an increasing number of us living over 30 years post-retirement, it’s worth being as well prepared as possible.
At The Goodman Partnership – pension planners Tunbridge Wells - we can help you to understand if your lifestyle needs can be met in retirement and how the different options of drawing benefits compare.
Give us a call on 01892 500600 or visit.