Older Brits are delaying retirement due to the rising state pension age (SPA), according to research from the University of Bath, yet many younger workers, particularly women, risk being underprepared by holding onto unrealistic early retirement hopes.

The research revealed a “clear” gap between expected and actual retirement behaviour, with younger workers expecting to retire before reaching SPA, while older workers tend to revise their plans when they are already close to retirement when opportunities to boost savings and continue working are more limited.

The findings showed that a one-year increase in SPA reduces the likelihood of retirement by 8.2 percentage points for men and 6.4 percentage points for women.

Meanwhile, those without active workplace pensions or outright home ownership are much more responsive to SPA reforms and adjust their expected retirement age upwards.

In contrast, homeowners who reported having an occupational pension are “significantly” more likely to retire once they reach SPA, compared to renters without an occupational pension.

The research also showed that while baby boomers are responding to policy by delaying retirement, Generation X is not adjusting retirement expectations in line with the rising SPA.

This trend is particularly evident among women with occupational pensions, who tend to lower their expected retirement age despite higher SPA eligibility.

Instead of adjusting to the new SPA, many still intend to retire early, expecting to rely on workplace pensions or part-time work in retirement to cover any income shortfall – assumptions that researchers warn may prove “overly optimistic”.

The University of Bath Department of Social and Policy Sciences lead researcher, Ricky Kanabar, said: "Ensuring individuals adequately prepare for retirement is of paramount importance due to increasing longevity and individuals being increasingly responsible to fund later life.

“Individuals’ expectations regarding the age at which they retire and their actual behaviour is therefore critical to determining retirement savings and income adequacy."

Kanabar said there is a pattern where some people are working longer due to rising SPA, but younger cohorts, especially women with an occupational pension, are adjusting their expected age of retirement downward in response to policy changes.

He warned that the danger is that such individuals are assuming they will retire early and then abruptly change their retirement plans later in life.

The research team emphasised that more must be done to raise awareness of later SPA, particularly among certain groups of younger (female) workers, to help people understand how much they will need in retirement and encourage better use of planning tools like the government’s Midlife MOT and upcoming Pensions Dashboard.

"Overoptimism regarding retirement income and reliance on access to workplace pensions from their mid-50s could lead to prime-aged workers having to make unplanned changes to later-life employment to adequately fund retirement,” Kanabar added.

“Policymakers need to better engage these groups now to improve financial resilience in later life."

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