Imagine working your entire life, looking forward to that moment when the state pension finally kicks in and gives you a bit of breathing room. Then, almost overnight, the rules change and you’re told you have to wait longer. For many, that extra wait isn’t just inconvenient – it’s pushing them into real financial hardship.
Recent research has laid bare just how severe the impact has been. Since the state pension age began climbing from 60 for women and 65 for men and women over the last decade and a half, hundreds of thousands more people in their early 60s are now living in relative income poverty. It’s a sobering reminder that policy changes, however necessary for long-term affordability, can have very human costs.
The Quiet Crisis Unfolding in Britain’s Pre-Retirement Years
The numbers are hard to ignore. Back in 2009/10, around 16% of people aged 60 to 64 were in relative income poverty (measured after housing costs). Fast forward to 2023/24, and that figure has climbed to 22%. That’s not a small shift – it represents roughly an extra quarter of a million people struggling to make ends meet in the years just before they can claim their state pension.
And the picture gets even starker when you look at specific age milestones. When the state pension age moved from 65 to 66 between late 2018 and 2020, the poverty rate among 65-year-olds more than doubled – jumping from 10% to 24%. Think about that for a second. One year you’re eligible for the pension, the next you’re not, and suddenly a quarter of people that age are officially in poverty.
It’s easy to see why this happens. The state pension, while not generous enough on its own for a comfortable retirement, does provide a reliable baseline income. Remove it for an extra year or two, and many simply don’t have enough private savings or earnings to bridge the gap.
What Happens Next: The Move to 67
We’re not done yet. Starting in April 2026, the state pension age will begin rising again, reaching 67 for both men and women by 2028. This change is expected to save the government around £10 billion a year once fully implemented. That’s significant money in public finance terms, but the knock-on effects on individuals could be substantial.
Experts warn that without supporting measures, we’re likely to see similar spikes in poverty as the threshold moves higher. The people most at risk are those who can’t easily extend their working lives – perhaps due to health issues, caring responsibilities, or simply the reality of age discrimination in the job market.
“Any further increases must be matched by clear policies to help people stay in good work for longer and protect those who cannot.”
– Retirement policy researcher
That sentiment captures the heart of the debate. Most people accept that some adjustment is needed as we live longer, but fairness matters.
A Growing Cohort Facing the Same Challenge
Timing makes this even more pressing. The UK now has around 8 million people in their 60s – up from 6.7 million in 2010 – and that number is projected to peak at 8.7 million in 2031. This bulge is largely the baby boomer generation reaching retirement age.
More people in that age bracket means more people exposed to the effects of a rising pension age. It’s not just a few isolated cases; it’s a demographic wave that policy needs to navigate carefully.
Working Longer: Success for Some, Impossible for Others
On a positive note, many have responded by staying in work. The employment rate for 64-year-olds has risen impressively from 34% in 2013 to 54% today. That’s a real behavioural shift and shows adaptability among those who can manage it.
But dig a little deeper and the picture is less rosy. Much of that increase comes from people who were already working continuing to do so. Those who leave the workforce in their 50s or early 60s – often due to redundancy, ill health, or caring duties – rarely return. Once out, the path back is tough.
And let’s be honest, not every job is sustainable into your late 60s. Physically demanding roles, high-stress environments, or industries hit by structural change leave many with few options.
- Health problems become more common with age
- Caring for grandchildren or elderly relatives often falls to this generation
- Age bias in recruitment is still a reality, even if illegal
- Recent unemployment figures show the job market isn’t always welcoming
All these factors combine to create a group who are effectively parked outside the labour market, waiting longer for their pension with inadequate income.
The Government Review: Hope for Change?
The government is currently conducting a formal review of the state pension age, looking at whether further increases are needed beyond 67. There’s also talk of reviving broader pensions policy discussions to tackle undersaving among working-age adults.
Nearly half of working-age people currently save nothing into a private pension. That’s a ticking time bomb for future poverty levels. Raising the state pension age might ease immediate public spending pressure, but it doesn’t solve the underlying issue of inadequate retirement provision.
Some analysts suggest redirecting a portion of the billions saved from higher pension age into initiatives that help people work longer if they want to, or better support those who can’t. Ideas include enhanced career advice, health support in the workplace, flexible working rights, or improved financial guidance when accessing private pensions.
What Can Individuals Do Right Now?
While we wait for policy responses, there are practical steps anyone approaching retirement can take to strengthen their position.
First, maximise private pension contributions while you still can. The tax relief is incredibly generous:
- Basic-rate taxpayers get 20% top-up
- Higher-rate get 40%
- Additional-rate get 45%
Plus growth inside the pension is free from capital gains and income tax. It’s one of the best deals available.
Don’t forget employer matching – many schemes offer generous contributions if you increase yours. And salary sacrifice can save National Insurance too (though note the upcoming cap from 2029).
Carry forward is a powerful tool. If you have a bonus or windfall, you can use unused allowance from the previous three tax years. With full carry forward available, some higher earners could contribute up to £220,000 in a single year – as long as earnings cover it.
Finally, review your investment choices. As retirement nears, risk levels often need adjusting. Make sure your portfolio aligns with your goals and timeline.
How Much Do You Actually Need?
A common question is what constitutes a “comfortable” retirement income. Figures vary, but many experts suggest around £30,000–£40,000 per year for a couple to enjoy travel, hobbies, and occasional treats, after housing costs.
The full new state pension currently provides just over £11,500 per person annually (for those with 35+ qualifying years). That’s a foundation, but clearly not enough for most people’s expectations. Private savings have to fill the gap.
In my view, the real crisis isn’t just the state pension age – it’s that too many people rely heavily on it without building additional layers of security. The earlier you start planning, the less painful later adjustments become.
Looking Ahead: Fairness Between Generations
Public opinion research shows broad acceptance that some rise in pension age is inevitable as lifespans increase. But acceptance hinges on perceived fairness.
Younger generations face their own challenges – high housing costs, student debt, gig economy insecurity. Asking them to fund ever-earlier retirements isn’t sustainable. Yet abruptly pulling the rug from under those nearing retirement isn’t fair either.
The sweet spot is gradual, predictable change paired with robust support systems. Better lifelong learning, health interventions in midlife, and flexible retirement pathways could make longer working lives realistic for more people.
Until those pieces fall into place, rising poverty in the pre-retirement years will remain a stubborn problem. It’s one that affects not just individuals, but families, communities, and the broader economy through reduced spending and higher benefit claims elsewhere.
Perhaps the most important takeaway is this: don’t leave retirement planning to chance or assume the state will fully provide. The landscape is shifting, and personal action today can make all the difference tomorrow.
The data is clear – delaying the state pension has real consequences. But with thoughtful policy and individual preparation, we can soften the blow and build a more secure future for everyone approaching retirement.
