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The Impact of our Ageing Population on Retirement Planning


You might already be aware that the UK has an ageing population but the rate at which times are changing is rapid. The latest data from the Office of National Statistics (ONS) shows that one in four Brits will be aged over 65 by 2050, up from nearly one in five in 2018. It also predicts that 40.34% more of 65 to 69 year olds will be economically active in 2067 (50.55%) compared to 1992 (10.21%).

The impact on the UK’s economic landscape is clearly going to become even more significant, while the impact on retirement planning is also one to contend with. ONS data highlights another key factor that is a 29% increase in the number of working women aged 60 to 64.

More and more people are working up to and beyond state pension age, with a phased out retirement becoming ever more common than a solid, pre-defined finish date. This all makes the retirement planning challenge potentially more complex, but solutions are evolving to respond to the changing landscape.

From Old Age Dependency to Active Dependency

New government measures are also needed to deal with the changing economics, but this is not as easy as it sounds. One suggestion from the ONS is to utilise the Active Dependency Ratio (ADR) instead of the traditional Old Age Dependency Ratio which is fast becoming outdated and irrelevant.

The ADR has a ratio approximately double the size of the OADR because it includes people of working age who are economically inactive, and people of pensionable age who are economically active (the former figure being much higher).

Instead of projecting increasing levels of economic dependency in the future like the OADR, the ADR considers projected increases in economic activity levels at older ages in the future and also evaluates the economically inactive population.

But the ADR comes with a number of instant barriers and fresh challenges. It takes economic activity by age into account, but as economic activity often does not translate to economic independence, this makes it difficult to access and quantify any solid data.

Such active individuals may still be dependent, e.g. those working part-time beyond the State Pension age may still be receiving benefits. This adds an extra dimension and level of complexity to the data.

A Changing Retirement Provision

This changing economic landscape makes one thing very clear – there is no longer any long-term certainty when it comes to retirement planning.

With an increased burden on the State Pension, those approaching retirement cannot rely wholly on the state to support them. The ONS are stepping up pressure to increase the state pension age in 2039, seven years earlier than planned, but we have yet to see whether this will take place and the potential consequences. In the meantime, retirees need to start making their own provisions if they wish to enjoy a good standard of living in their later lives.  

Many of us are adopting a transitional approach to retirement and there are many factors that may impact the direction in which retirement planning takes. As the background remains so unpredictable and the transition between work and retirement continues to grow more fluid, the ADR may prove more useful in inspiring solutions. But we are nowhere near a solid framework just yet.

In Sickness and in Health

While increased life expectancies can only be a good thing, living longer also means that more funds are required to fund our lifestyles. It also brings with an unfortunate reality that more people will need social care in later life.

This means either relying on family members or, more commonly, finding the funds for full-time nursing and social care either at home or in a facility. The costs can ramp up quickly even when the retiree is well enough to spend time at home, with additional requirements typically including panic buttons and home modifications such as stairlifts.

Research also shows that people in the UK are far more tied to their homes than those in other countries, which means selling their property to fund care would often be a last-resort. This attitude also needs to be taken into consideration when the government looks at social care funding expectations and saver incentives.

The government’s highly-anticipated social care green paper is yet to materialise which further supports the argument that retirees need to determine their own solutions instead of holding out in the hope for a solution to present itself.

The ONS predict that economic activity will increase most among those aged 60 to 69 yearsbut warns against key factors that may influence this projection, such as the value of the State Pension and changing attitudes to work.

As it stands, no reliable projections can really be made, and every individual should make their own plan designed to cover potentially high costs during the retirement years. And it’s not only about when things go wrong.

Retirement is the time that many of us will fulfil lifelong dreams, such as travelling, buying a second home abroad or completing extensive home improvements. The last thing any of us need after years of working is to struggle to make ends meet during a time when we deserve to enjoy ourselves.

We also cannot emphasise enough how important it is to start planning for retirement early. Personal debt has become worse in recent years and the pattern by which younger people are choosing to purchase a property, start a family and retire later is all putting increasing pressure on savings models.

It’s essential to assess your protection needs and the resilience of your portfolio on a regular basis to protect against income shocks and benefit the most from your savings efforts.

Through our group of companies, we offer advice and support on all aspects of retirement planning. Our specialist team at Vintage Corporate are expert arrangers of employee benefits packages. Automatic enrolment is a key component whereby we advise employers on how to roll out the most effective pension scheme for their workplace, helping every individual to stay on track with their retirement goals. For further advice and support, contact our specialist team.

For advice and support on all aspects of retirement planning for individuals, contact our financial protection specialists at Vintage Wealth Management. We will help you to build a personal life cash flow model including a range of visual “what if” scenarios, designed to determine how long your savings will last and ensure that you’re best prepared for anything that life has to offer. Contact the team via email at or give us a call on 020 8371 3111.