The Department for Work and Pensions (DWP) is likely to accelerate the planned increase of the state pension age to 68, as new data reveals a decline in healthy life expectancy in the UK. People are spending fewer years in good health than a decade ago, raising concerns that the nation's health is "going backwards."
Healthy Life Expectancy Declines
According to an analysis by the Health Foundation think tank, healthy life expectancy for men in the UK has fallen from 62.9 years in 2012-14 to 60.7 years in 2022-24. For women, it dropped from 63.7 to 60.9 years over the same period. This trend contrasts with steady improvements seen in countries such as Japan, Norway, and Spain.
State Pension Age Already Set to Rise
The Labour government has already committed to raising the state pension age to 67 by 2028, with a further increase to 68 scheduled for 2046. This would impact everyone born after 1961. However, experts warn that the timeline for reaching 68 could be brought forward due to the worsening health outlook.
Sarah Coles, head of personal finance at AJ Bell, said: "The problem is likely to get worse. Healthy life expectancy has fallen by two years in a decade, so if the trend continues, more people will face a shortfall."
Planning for an Accelerated Pension Age
Ms Coles advised that individuals should consider how they would cover any period before the state pension is due. "For many people, the answer lies in revisiting pension contributions, aiming to build a pot that's big enough for you to take a higher income in the earlier years," she said.
She also recommended looking into income protection insurance, which can pay out if you have to stop work for health reasons. "Think carefully about how long you would need it to pay out, when it would need to kick in, and how much income you need to cover," she added.
Options for Those Closer to Retirement
For those nearer retirement, Ms Coles suggested it's never too late to make a difference. "It's also a good idea to have a Plan B just in case: whether you need to consider downsizing or using other assets to produce an income until you reach state pension age. It might also mean building a bigger emergency savings safety net to cover any additional costs."
The earlier you start planning, the longer you have to fill potential holes in your retirement income. With the possibility of an accelerated pension age rise, taking proactive steps now could be crucial.
