The dream of retirement, once a certainty for past generations, seems to be drifting away from the perception of possible within many young minds. For younger people in the UK, the promise of a peaceful retreat from work—a time to rest, travel, and enjoy savings that were assembled through pure, hard work - feels increasingly distant. Instead, an unsettling question looms: Will we ever be able to retire at all? 

The rules are changing. The State Pension age, once a fixed milestone, is inching ever higher. Now, pension age is at sixty-six, but in a few years, it will rise to sixty-seven. By 2050, some forecasts predict it could reach seventy-one, forcing people to work for longer than ever before. The reason is simple but harsh: there are fewer workers to support an aging population. The numbers no longer add up. 

Yet, the problem runs deeper than government policy. Currently, it lies in the financial smarts of many young adults in the UK. A NatWest survey revealed that a quarter of individuals aged 35 and under have £500 or less in savings, and 45% are not actively saving for retirement. It seems that many are living paycheck to paycheck, with nothing put aside for the distant future. The average pension pot in the UK barely scratches the surface of what is needed for a comfortable retirement. For many, the very idea of setting aside money for old age seems impossible when the cost of living today is already crushing. 

And then there are the unseen costs—the toll of poor health, the weight of financial illiteracy, and the lack of opportunities that make it even harder for people to build a secure future. As the retirement age creeps higher, so too does the question of whether many will be physically able to keep working into their seventies. 

This is not the world our grandparents knew. The golden years, once taken for granted, are now uncertain. For some, retirement will still be a reality. But for many, the road ahead may be longer than they ever imagined.

Why does it actually matter? 

So how does this affect our society, and the future? While you may think a higher pension age will increase resources and therefore be a major boom for the UK economy. However, it is important to remember that an older workforce isn't necessarily a more productive one, as people work into their late 60s or even 70s, physical and cognitive decline could impact productivity. This could slow overall economic output. This is without mentioning the major costs businesses will face, thinking their output will increase, with more resources, maybe even thinking they can pay older workers less, ultimately, causing inefficient allocation of resources, as productivity will be lower than what businesses predict.  

Furthermore, in the long term, we may see older workers delaying retirement, which will mean fewer jobs will open up for younger generations, which will not only reduce social mobility, as actually being employed becomes more difficult in inspirable positions, but also discourage innovation, as older workers may struggle to bring new ideas, especially as they will be working for even longer, creating further habits.  

Lastly, increasing state pension age may backfire on the government, as government spending on healthcare may have to increase to meet a possible increase in worker health issues as workers will be older. Although tax revenue will increase if workers are working for longer, the increase in government spending may cause a budget deficit if government spending is greater than tax revenue. However, this could be seen as a major what if?  

Why are changes necessary? Just another way of government cutting spending? 

There are a few main reasons for why state pension age is increasing in the UK. Firstly, quite simply, people are living longer. It's safe to say that when State Pension was introduced under the Clement Atlee government in 1948, life expectancy was far lower than what it is today. Back then, a man aged 65 could be expected to live another 15 years, today they could be expected to live another 20 years. Therefore, the costs for pensions of government are far larger than what they used to be. It could be argued that this simply cannot be sustained. Therefore, keeping state pension age at 66 could hurt other sectors that might receive less funding in the long run.  

Secondly, many young adults in the UK are not saving enough for retirement, often due to a lack of awareness about future costs. With rising rent, student loan repayments, and everyday living expenses (which are also rising due to inflation), saving for retirement for young adults can feel like an impossible task, leading many to delay or ignore pension contributions, a task which should be carried out as regularly as possible. A 2023 study found that over 25% of UK adults under 35 have little to no savings, and many rely solely on the State Pension, which may not be enough to sustain a comfortable retirement. Without consistent contributions to workplace pensions or private savings, younger generations risk facing financial hardship in later life, potentially forcing them to work far beyond traditional retirement ages. Which, as previously mentioned, can cause further economic troubles. 

Lastly, the UK’s aging population, means that the funding of government spending, through taxation, simply isn’t possible at the current State Pension Age. To put it simply, there are more pensioners and fewer working age individuals paying into the system (taxation) that is funding pensions. In 1950, there were 5 working people for every 1 pensioner. Today, it's closer to 3 workers per pensioner, and by 2050, it could be 2 workers per pensioner. This simple stat exemplifies the financial strain on the state pension system, as fewer people are contributing taxes while more people are claiming pensions. Sounds like an economical nightmare, right?  

What is flexible retirement? A possible solution to the UK’s problem?  

A possible solution I am proposing after a bit of digging, is flexible retirement, a concept that has been implemented in different forms from other countries, which allows people to phase into retirement rather than stopping work suddenly, while not only taking stress of workers that can't wait to retire but also takes some financial strain off the government. Instead of a fixed "retirement age", people could be given the option to claim a reduced pension earlier, around sixty-six, or wait longer for a higher pension, at 70, for example. This may take stress off workers, by giving them more choice, but may mean a smaller pension pot for individuals if taken earlier, which will reduce government spending. 

Another attribute of “flexible retirement’ that could be implemented in the UK, is a hybrid work-pension structure, a sort of semi-retirement, if you will, where people work part-time while claiming a portion of their pension to gradually ease into full retirement. This could benefit those who can’t afford to stop working completely but want to reduce their hours in later life.  

Lastly, once again, reducing government expenditure, but taking stress of individuals that may be having doubts around their future. Employers could be incentivised with a form of subsidy, or tax incentives, to encourage offering age-friendly jobs allowing older workers to stay employed in less physically demanding jobs. This ensures that workers healthcare and welfare are secure, and that older workers are not being taken advantage of.

Are the rumours true? Is a harsh reality on the horizon? 

To conclude, retirement will probably be far more uncertain than the latter mentioned, many of the younger generations will work into the late 60s and early 70s. In the future, young adults will have to manage their private savings accounts and private pensions carefully, as relying on a state pension will make life challenging in later years.