State pension age rule change costs people thousands
Under new rules, anyone born between 6 December 1953 and 5 January 1954 has seen their state pension age delayed by up to three months, and their retirement date set at 6 March 2019.
Based on the current flat-rate state pension amount, people who have had to wait an extra three months to receive their state pension will have missed out on just over £2,000 in income, according to analysis by investment platform AJ Bell.
A full year of lost state pension will cost savers almost £8,500 in today’s prices.
Looking ahead, the state pension age is set to rise to 67 by 2028 and then to 68 by 2039.
The table below outlines the transition in the state pension age from 65 to 66:
|Date of birth||Date State Pension Age reached|
|6 December 1953 – 5 January 1954||06-Mar-19|
|6 January 1954 – 5 February 1954||06-May-19|
|6 February 1954 – 5 March 1954||06-Jul-19|
|6 March 1954 – 5 April 1954||06-Sep-19|
|6 April 1954 – 5 May 1954||06-Nov-19|
|6 May 1954 – 5 June 1954||06-Jan-20|
|6 June 1954 – 5 July 1954||06-Mar-20|
|6 July 1954 – 5 August 1954||06-May-20|
|6 August 1954 – 5 September 1954||06-Jul-20|
|6 September 1954 – 5 October 1954||06-Sep-20|
|6 October 1954 – 5 April 1960||66th birthday|
Source: AJ Bell
Time to start saving
Tom Selby, senior analyst at investment platform AJ Bell, said: “Despite the gradual transition, for many this will be extremely painful as they consider working longer or spending less money in retirement.”
From the government’s point of view, increases to the state pension age are deemed necessary to stop social security spending spiralling out of control. The Office for Budget Responsibility estimates that it will spend £96bn on state pensions in 2018-19 alone.
Life expectancy has also changed over the past 40 years. Male life expectancy at birth has risen from 71 in 1980 to 79 today, while male life expectancy at 65 has increased from 13 years in 1980 to 18.5 years today.
For women, life expectancy at birth is around 83. Meanwhile, those who reach the age of 65 can expect to live another 21 years in retirement. As people are living longer, it creates more of a strain on government money.
Selby added: “Anyone wanting to retire at the age of 65 needs to consider how they will fund their lifestyle as the state pension age recedes. For many that will involve working longer, either full-time if they are able or part-time to supplement their retirement income.
“Anyone who doesn’t want to do this needs to either save more money today or accept a much lower income in retirement.”