05 June 2023 , 12:59
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Workers who are hoping to retire early have been warned they need an income of £136,000 in the years before they can claim their state pension.
New analysis by PensionBee has highlighted the “pre-state pension gap” which is the total amount someone would need if they stop working before they can claim their state pension.
The current state pension age for women and men retiring now is 66, but it will rise to 67 between 2026 and 2028.
A further increase to 68 is due to happen between 2044 and 2046 - however, a review released in 2017 called for this to be brought forward to between 2037 and 2039.
A decision had been expected this year, but this is now not anticipated to happen until 2026, after the next general election.
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You can decide to retire and stop working before you're able to claim your state pension - but this will be based on your financial situation, and if you can afford to do so.
The new research from PensionBee takes the example of someone who wishes to retire at 60, assuming their state pension age is 68 and they're retiring as a couple.
They would need an income of £136,000 saved up to support them during this eight-year gap, on top of what they need for the rest of their retirement.
When considering the average life expectancy for women (88) and men (85),
PensionBee found a woman retiring at 60 in a couple would need a combined retirement income with her partner of £476,000 for her 28 years of expected retirement, to live a moderate lifestyle.
If she claims the full state pension from the age of 68, £212,000 of this total would come from her state pension payments - this means the remaining £264,000 would come from the couple’s workplace or personal pensions and other savings.
PensionBee today launched its state pension age calculator to help you work out if you can afford to retire before you can start your state pension claim.
Becky O’Connor, Director of Public Affairs (VP) at PensionBee, said: “The dream of retiring early is alive. For many people, it is in fact necessary to give up work before they reach State Pension age, due to caring responsibilities, or illness.
“As the State Pension age rises, more and more people will find they either want or need to retire before they reach it.
“So identifying how much extra pension would be required to do so is an important part of retirement planning.”
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