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Over a third of baby boomers set to retire later than SPA

By: Sonia Rach

More than a third (38 per cent) of the UK’s baby boomer generation aged 58 to 75 are set to retire later than the current state pension age of 66. 

According to the Dunstan Thomas’ nationwide study, the average length of time that this group plans to work beyond their 66th birthday is 4.3 years when they will be over 70 years old.

The current average retirement age of this generation is rising steadily and now stands at 63.4 years, the study found.

Dunstan Thomas commissioned Opinium to complete the research which gained responses from 1,272 baby boomers aged 58 to 75 across the UK.

It found that nearly half (49 per cent) of UK boomers have not yet retired and of these working 58 to 75 year olds, 23 per cent want to remain in paid full-time work and 47 per cent in paid part-time roles beyond age 66.

Nearly one in 10 (9 per cent) that are still working full-time declared that they ‘never want to give up work’, while 12 per cent still have not made up their minds on when they will stop working.

Only 18 per cent are determined not to work beyond the current state pension age.

The study also found that the average annual pre-tax household income amongst all UK boomers that are still working was £44,979.20.

However, average annual pre-tax household income of retired boomers falls to £30,255 – a drop of nearly a third (32.74 per cent) at retirement.

Commenting on the research, Adrian Boulding, director of retirement strategy at Dunstan Thomas, said: “If you are planning to work beyond state pension age, make sure you share that news with your financial adviser as soon as you can.”

Speaking to FTAdviser, Boulding said: “Your adviser will be able to help you adjust your de-risking glide path so that you stay invested and benefiting from tax-free compound growth on your pension-held investments for longer.

“Secondly, when you are at the point of retirement your adviser will be able to advise you on a safe withdrawal rate from your income drawdown plan. This rate may well be higher than the norm if you are retiring later than the state pension age.”

DB pensions vs DC pensions

The research found that nearly half (48 per cent) of boomers are still benefiting from access to more generous defined benefit pensions.

However, DB pension entitlement falls away slightly among younger boomers, with 51 per cent of those aged 72 to 75 had a DB pension, compared to 47 per cent of those aged 58 to 61.

A fifth (19 per cent) of boomers have occupational defined contribution plans and a quarter (24 per cent) have personal DC plans, including self-invested personal pensions, while 14 per cent of boomers are reliant on their state pension entitlement alone.

Dunstan Thomas said its research showed that the impact of DB versus DC pensions is already showing in retirement income levels with those in DB pensions schemes expected to derive 51 per cent of their total retirement income from their plans.

Meanwhile, for DC-holding boomers, it anticipates only taking 37 per cent of their retirement income from their plan. 

The survey found that baby boomers gain an average of 57 per cent of their total retirement income from all pensions including the state pension, while just a third derive over 80 per cent of their total retirement income from their pension policies.


Elsewhere, the research revealed that a growing number of boomers are set to release equity from their homes or downsize to free up more funds in retirement.

About 6 per cent have already released some equity from their home and the same percentage have downsized to access capital.

Looking forward, it found more than one in every six (17 per cent) boomers are planning to downsize their home to bolster their finances in retirement, and 8 per cent plan to release equity to support their retirement income.

The research found that 23 per cent of retired boomers still support their children financially and the average number of years they expect to keep this up once they have retired is 9.6 years.

Meanwhile, the Pensions Lifetime Savings Association’s retirement living standards figures suggest a total moderate living standard group budget for ‘helping others’, including providing grandchildren with gifts and helping their children pay for school uniforms and/or school trips for their children would be no more than £600 (or £50 per month).

However, Dunstan Thomas’ consumer research suggests that the level of subsidisation that many boomers are providing by financially supporting children and grandchildren deep into retirement, is not properly allowed for in PLSA’s latest 2021 estimates.

Boulding said: “Many boomers are clearly financially supporting their children and increasingly grandchildren. And what they are likely to be setting aside for this purpose could well run into the thousands of pounds per year. This level of subsidisation by boomers is worthy of further investigation because it has clear implications for the retirement income levels they will need to support their ambitions to help younger generations.

“Indeed, these new findings suggest that many retired boomers may already be living well below the moderate retirement living standard level outlined by the PLSA once this level of intergenerational subsidisation is factored in. It goes some way to explain the increasing appetite for downsizing and equity release amongst Boomers for example.”

The oldest boomers captured by this study aged 72 to 75 believed they will be supporting their children for an average of 14.5 years into retirement.

This intergenerational subsidisation is increasingly spreading to a second generation with boomers’ grandchildren.

The study found that 16 per cent of boomers are supporting their grandchildren financially and nearly half of these boomers (seven per cent) are financially supporting three or more grandchildren.

A further 5 per cent are supporting two grandchildren and 4 per cent are supporting one grandchild.

Boomers are supporting their grandchildren in diverse ways, with a number clearly making substantial contributions to help them through school and university, or to buy their first home and build personal savings pots: a third (32 per cent) are making contributions towards their grandchildren’s holiday costs, 63 per cent make gifts into their savings pots, 7 per cent contribute to or fully pay school and university fees.

In addition, 4 per cent have contributed towards the cost of their grandchildren’s first flat or house and 13 per cent have set up a trust fund for their later life.

A total of 38 per cent of this group have made provision for their grandchildren in their will.

Boulding added: “Our study reveals selfless behaviour by many baby boomers as they allow their own living standards to fall below the PLSA ‘moderate’ retirement living standards in order to maintain financial support to children and grandchildren.

“It also helps explain why retirement ages are drifting upwards. We are seeing early indications that retirement income levels are falling below what many need and that’s before the impact of DB pension closures are truly felt. The DB to DC switch is set to hit the next generation of retirees – Generation X – much harder of course.”

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