State pension age 66

When I’m 66 – state pension age latest milestone

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The latest phasing of State Pension Age (SPA) increase is now finished.

On 6 October 2020, the SPA reached 66. Unless current legislation is changed, it will remain there until 6 April 2026, at which point the next increase, to age 67, starts to be phased in over the following two years. Thereafter the move to 68 is less certain.

Over two years ago the Department for Work and Pensions (DWP) announced that the phasing to 68 would start in April 2037 and again run for two years. However, at the time the DWP avoided introducing any legislation, saying that it would undertake a review of the latest life expectancy projections before acting. Since then the Secretary of State at the DWP has changed three times, but there has been no news of a review. Meanwhile, the rise in life expectancy has slowed dramatically, suggesting that the step up to 68 may be delayed.

The arrival of an SPA of 66 prompted the Institute for Fiscal Studies (IFS) to publish a briefing note examining the impact of the SPA changes to date. These started with the controversial stepped increase in women’s SPA from 60 to 65 between April 2010 and November 2018. With the help of DWP data, the IFS showed that each year’s increase in women’s SPA produced a corresponding increase in the proportion of women remaining in work.

For example, the employment rate of 65-year-old women jumped from 21% in the third quarter of 2018 to 35% in the second quarter of 2020 as they were no longer able to claim a state pension. For 65-year-old men, there was also a sharp rise over the same period, from 34% in the third quarter of 2018 to reach 45% in the second quarter of 2020.

How much is enough in retirement?

The Retirement Living Standards, based on independent research by Loughborough University, have been developed to help us to picture what kind of lifestyle we could have in retirement. It shows what retirement could look like at three different levels – Minimum, Moderate and Comfortable – and what goods and services would cost for each level.

This can be found at www.retirementlivingstandards.org.uk.

The research is eye-opening! A single person will need about £10,200 a year to achieve the minimum living standard, £20,200 a year for moderate, and £33,000 a year for a comfortable lifestyle. For couples, it is £15,700, £29,100 and £47,500 respectively.

  • A ‘minimum’ lifestyle covers all your needs, with some left over for fun and social occasions. You could holiday in the UK, eat out about once a month and do some affordable leisure activities about twice a week.
  • A ‘moderate’ lifestyle provides more financial security and more flexibility. You could have one foreign holiday a year and eat out a few times a month. You’d have the opportunity to do more of the things you want to do.

Around half of employees are projected to have an income between minimum and moderate.

  • A ‘comfortable’ lifestyle allows you to be more spontaneous with your money. You could have a subscription to a streaming service, regular beauty treatments and two foreign holidays a year.

About one in six employees are projected to have an income between moderate and comfortable.

As the IFS says, “With the new state pension worth £175 per week, having to wait longer to claim a new state pension significantly reduces the incomes of most people affected by this reform.” Food for thought (and reason for reviewing your private pension provision) if your retirement planning still revolves around age 65…

At Armstrong Watson Financial Planning & Wealth Management, we work with you to build your retirement plans and regularly review these so you know if you will remain on track. We can use cashflow forecasting to allow you to understand your plan more easily so you can make informed decisions.


For advice on retirement planning for a comfortable retirement, please get in touch with Chris Hill on 0808 144 5575 or email chris.hill@armstrongwatson.co.uk.

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The deadline for February’s claims is 15 March 2021, so please submit claims to jrs@armstrongwatson.co.uk.