When can I retire? Calculate your best retirement age

Working out a realistic retirement age is one of the most important aspects of retirement planning.

If you’re asking yourself ‘When can I retire?,’ you’ll need to consider a number of factors, including your life expectancy, state and private pension income and outgoings.

How do I work out what age I can retire at?

There is no longer any fixed ‘retirement age’ in the UK – you can retire whenever you want. 

However, the key ages to bear in mind are:

• The age at which you can access your state pension (currently 66 and rising in the future).

•  The age at which you can access your pension pots (55 or over, this is also rising in the future).

• The age at which you can access any final salary workplace pensions (this depends on the scheme, but is usually 60 or 65).

But the age you actually stop working is entirely up to you. Many people may continue working well into their 70s and even beyond, while others might be wondering how to retire early.

Assuming you want to retire as soon as it is practical to do so, here are the main factors to consider:

• Your current age

• How much you’re contributing to your pension pot each month

• How much state pension you’re eligible for

• How long your retirement is likely to be

• Whether you have any additional reliable sources of income or other investments

• How you will choose to take your pension

You can use our free private pension pot calculator to get a better idea of when you can retire. 

It suggests an optimal retirement income based on a percentage of your current income and works out what you need to do to achieve this via your pension pot.

What is the average retirement age in the UK?

The average retirement age is around 65.7 years for men and 64.5 years for women. This is the highest level on record since the Office for National Statistics (ONS) started recording this information in 1984.

However, one study found nearly a third of the workforce expects to retire after retirement age due to factors such as the cost of living crisis.

If you want to retire at 55, as some people on moderate incomes still manage to do, you’ll need to plan carefully and start preparing early.

How much income will I need in retirement?

First you need to work out your fixed outgoings every month, including bills, loans and mortgage/rent payments. Next, add in regular costs, such as groceries and transport.

These are the absolute basics you’ll need to cover to survive during retirement. If your unavoidable outgoings are far higher than your expected combined income, you’ll need to cut back, increase your pension contributions or delay retirement to allow your savings to build up.

Learn more: what are the best savings accounts for the over 60s?

You might think that, without work-related expenses such as train/bus tickets, you’ll be able to manage on a far lower income. However, you’re likely to spend more on household bills, hobbies and holidays.

Inflation is also likely to push the cost of living up over the years – for example, in October 2022, it rose to a record 11.1%. It has been much lower recently at 3.8%, but retirement is a long time, and it could all change again.

How much income you’ll need in retirement may influence your decision about whether to take your pension as drawdown, annuity, or a mixture of both.

What age can I receive the state pension, and how much is it likely to be?

The state pension age for both men and women is 66. The Pensions Act 2014 also set out that it will increase between 2026 and 2028 to 67 and 68 between 2044 and 2046.

If you’re a man born on 6 April 1951 or before, or a woman born before 6 April 1953, you can claim the basic state pension. If you have made 35 years of national insurance (NI) contributions, you’ll be entitled to the full amount of £176.45 per week (2025/26 tax year).

You’ll also be able to claim additional state pension, which has no defined upper limit and is based on your additional NI contributions.

People born after this date will be entitled to the new state pension, which is a maximum of £230.25 per week. You’ll need to have 35 ‘qualifying years’ (earning more than £242 per week in employment, paying NI contributions during self-employment or claiming certain benefits) to get this amount.

If you don’t have enough credits, you can pay voluntary NI contributions to increase your state pension.

You can get an idea of how much your state pension is likely to be by requesting a state pension forecast. You can also get more money in later life if you defer taking your state pension.

The current triple lock will see the state pension increase by whichever is highest out of:

• Earnings growth figures between May and July the previous year;

• Consumer Price Index (CPI) inflation from the previous September, or

• 2.5%

How much income will I get from my private pension?

Your private pension income will depend on the size of your pension pot and what you’re willing to do with the funds in it. Again, you can use the Unbiased pension calculator to work this out.

There are a number of ways to take income from your private pension. You can withdraw up to 25% of your pension tax-free, and the rest will be taxed as normal income.

Broadly speaking, you can achieve higher income in the shorter term from drawdown, but this is less reliable than an annuity, which is guaranteed for life.

With drawdown, you can eventually run out of money if you take out too much, and/or if the stock market performs badly. The annuity will never run out – the snag is that the annual income may not be as high as you’d like.

Some retirees find that a mixture works well for them: an annuity for reliability, and a drawdown fund for flexibility.

What about other sources of retirement income (such as equity release)?

Other sources of income can play a major role in how early you can retire. A popular method is to release some of the equity from your home.

This can help you cash in on any increase in value of your home, giving you money to spend now. The downside is that you won’t get as much money for that equity as you would by selling the property, i.e. it can be relatively poor value.

Downsizing is another option, though you should time your move carefully so as not to leave behind a home and a neighbourhood where you feel happy. You might alternatively be able to rent out a room in your existing home to earn a bit of extra income.

Working part-time in retirement at something you enjoy (dog walking is popular and always in demand) can also help to make ends meet.

When might I die, and how does this affect retirement age?

The average life expectancy for 65-year-olds in the UK is 22.5 years for women and 19.8 years for men.

According to data from the ONS, 65-year-old women have a one in four chance of living to 94, while men have the same chance of living to 92.

If you’re one of those who live to be 100+, you could have three or four decades of retirement.

Make sure your retirement planning covers you comfortably beyond the average life expectancy so you’ve got the best chance of keeping a good standard of living until your death.

Should I consider retiring at a later age?

If you’re in good health and enjoy your job, retiring later will give your pension pot more chance to grow, securing you more income when you do retire.

Deferring your state pension can boost the amount you receive, as long as you defer for at least five weeks. It will increase by 10.4% per year for basic state pension claimants and 5.8% for new state pension recipients.

However, it doesn’t always pay to wait. If you defer your new state pension for just a year, you’ll need to live for at least 17 years to make it a worthwhile decision.

Get expert financial advice

Deciding when to retire is a deeply personal decision influenced by your financial situation, health, and lifestyle preferences.

Whether you aim to retire early or plan to continue working into your 70s, understanding the different options for accessing your pension and other sources of retirement income is crucial.

By carefully planning and considering the various factors that affect your retirement age, you can work towards a retirement that suits your needs and aspirations, and ensure your golden years are comfortable and secure.

Let Unbiased match you with a financial adviser for expert financial advice on calculating your ideal retirement age, optimising pension contributions, and maximising your retirement income options.