The Myth of Retirement at 65: Why It’s Really in Your Hands

The Myth of Retirement at 65: Why It’s Really in Your Hands

For decades, society has ingrained in us the idea that retirement happens at 65 or, for some, 70. It’s a milestone we’re told to look forward to: the golden years of relaxation after decades of hard work. But let’s pause for a moment and ask – why 65? Why do so many people just accept this as their fate? The truth is, your retirement age isn’t set in stone. It’s entirely within your control, determined by how you plan, save, and invest.  

In this post, I will explore the origins of the concept of a set “retirement age”.  I’ll explain some of the actions required to take control of your investments, and I’ll provide a guide to help you critically evaluate advice.

The Origins of a “Retirement Age”

In the 1880s Otto von Bismarck, the German Chancellor at the time, introduced the first national state pension system.  Initially, the age at which you could collect your pension was 70, although this was later reduced to 65.  The thinking was that not many people would live beyond that age, and so it would not be a major drain on the finances of the nation.

At the time, the average life expectancy was, depending on who you ask, anywhere from 35-50.  Just a few decades later, following the two world wars, the typical life expectancy was almost 60 years old.  In short, when the system was created it was never designed to serve society in the late 1900s, never mind in the early 2000s.  However, the age of 65 was adopted by other nations such as the UK and the US when they created their pension policies.  The age of 65 was very much an arbitrary number and I doubt when OvB was creating this system he had people typically living to their 80s in mind.    

Fast forward to 2024…

As of 2024, the life expectancy of UK adults is somewhere in the region of 78-84 depending on whether we’re talking about those born as men or women, and also how the figure is calculated.  In the times before modern medicine child mortality was high, and if you included all those children in the calculation of average (mean) life expectancy then it would bring the average down.  If you remove from the calculations all deaths before the age of 10, then you would have a more accurate idea of adult life expectancy.  

Anyway, before I go down a statistical rabbit hole I want to come back to pensions and retirement age.  The point I’m making is that we are relying on systems built for a world that no longer exists.  

Why People Accept 65 or 70 as Their Retirement Age

Social Conditioning

We grow up hearing that retirement happens at 65, 68, or 70. Pensions, state benefits, and workplace retirement plans often reinforce this number, giving it an air of inevitability.  There’s also a lot of talk in the media about the government changing the “retirement age”, as though you can only retire with the blessing of the government.  This is not the case.  There’s a massive difference between the age at which you can access specific benefits (i.e. the state pension) or certain investments (i.e. SIPPs or workplace pensions), and the age at which you can declare yourself retired.  

As an aside, when I was working as a mortgage advisor one question that would almost always lead me to have my head in my hands concerned retirement age. The conversation would typically go something like this:

Me: At what age do you plan, or think, you’ll stop working completely?

Them: Tomorrow if I win the lottery haha.

Me: *Another check in the weekly tally for how many times I’ve heard this so far*

Them: Erm… what is it now?

Me: What is what now?

Them: Retirement age? it’s 65, isn’t it?

Me: So there’s no such thing as a retirement age. There’s the age at which you would be eligible to receive the state pension. Someone with your date of birth would be eligible to receive it at 65/66/67/68 (depending on the person I’m talking to). However, you can retire at whatever age you choose.

Them: So what age should I put down?

Me: That depends on your circumstances and when you think you can retire.

Them: Oh, just put down the normal retirement age.

Me: Do you mean the state pension age?

Them: That’s what I said.

Lack of Financial Literacy

Most people don’t realise that the age they retire isn’t dictated by some external authority; it’s dictated by their financial readiness.  You can retire whenever you have the funds to do so.  Retirement isn’t an age – it’s a different number altogether.  It’s whether you have the money to support yourself for the remainder of your life. 

In simple terms, most FI followers use the 4% rule, in that once you have 25x your estimated annual cost of living accumulated you can draw down 4% of that fund per year.  In 95% of cases, it’s expected that the pot of money would last for at least 30 years without running dry.  The reality is a bit more nuanced than I’ve outlined and I’d recommend reading up on it in more detail before basing investment decisions on that single premise.  

Fear and Procrastination

The idea of planning for retirement can feel overwhelming. Many delay serious saving or investing until it’s too late to retire earlier.  The earlier you start, the earlier you can potentially retire.  Waiting until you’re older, or until you’ve done this or that is putting the cart before the horse.  There will always be something that you can use as an excuse not to invest in your future.  

Dependence on State Pensions

State pensions can create a false sense of security, leading people to believe they’ll have to work until the state “allows” them to stop.  The state pension is a great benefit in the UK, but it’s not enough to live comfortably without other sources of income.  It’s a solid foundation, but to have an enjoyable retirement you will almost certainly need to supplement it with your own investments.

Why Your Retirement Age Is in Your Hands

Retiring earlier isn’t a matter of luck or a big inheritance. It’s about making intentional choices with your money. Here’s how:  

Invest Early and Consistently

Compound interest is your best friend when it comes to building wealth. The earlier you start, the less you need to contribute each month to reach your goals. Even modest amounts can grow significantly over time if invested wisely.  If you are in your late teens or early twenties and reading this, you have no idea how much I envy you.  If I’d started at that age, I’d almost be at my FI number by now.  

Understand Your Retirement/FI Number

Forget age and focus on your *number*. How much do you need to live comfortably without working? Once you have a clear target, you can create a roadmap to reach it.  If you are aiming to utilise the 4% rule, work out your estimated annual cost of living and then multiply it by 25.  If your cost of living was £24,000 (i.e. £2k per month), then your FI number would be £600,000.  You can then work backwards using an investment goal calculator to see what you would need to invest each month to reach that figure.  For example, if you wanted to get to £600,000 in 20 years and you believed that the market would return 6% per year, you would need to invest approximately £1,360 every month.  25 years at 8% would require approximately £685pm.

These figures are not guaranteed.  Lots can happen for better or worse.  You could have years of double-digit returns, and then years where the market experiences losses.  These figures are guides; nothing more, nothing less.  

Live Below Your Means

The key to financial freedom isn’t just how much you earn – it’s how much you keep. Reducing lifestyle inflation and saving aggressively can fast-track your retirement plans.  The sooner you start, the more time those savings have to compound.  Lifestyle inflation is the death blow to many FI plans.  You don’t need to upgrade your car/phone/computer every year or two.  Don’t mistake luxuries for necessities, and try to avoid unnecessary lifestyle inflation as much as possible.

Take Control of Your Investments

Relying solely on a state pension or workplace scheme isn’t enough. Educate yourself and stay consistent.  If you don’t understand the investment, don’t do it.  Ask questions and seek expert advice.  Once you are investing, take time to regularly check in with your investments and make sure you are on the right path.  If you need to change course, so be it.    

How to Assess Advice You Are Given

Whether it’s about finances, health, or life decisions, we’re constantly surrounded by advice. Some of it can be life-changing, while other bits might lead you astray. So, how do you separate the gold from the garbage? 

Consider the Source

No, I’m not talking about whether to put HP or ketchup on your bacon sandwich (it has to be brown sauce, but I digress).  

The credibility of advice often hinges on who is giving it.  

Are they qualified?

Do they have expertise or experience in the area they’re advising on?  

What’s their track record? 

Have they successfully applied their advice in their own life or helped others with it?  

Perhaps most importantly, do they have an agenda? 

Be wary of advice from those who might stand to gain financially or otherwise if you follow it, for example, a financial advisor earning commissions on certain products may not always act in your best interest.  

Fact-Check the Claims

Don’t take advice at face value; verify it.  

Cross-reference reputable sources.

Look for consistency in advice from credible books, articles, or research studies.  

Seek evidence.  Good advice is often backed by data, logic, or proven methods, not vague anecdotes or opinions.  

Avoid logical fallacies.  Watch out for overly simplistic reasoning, such as “This worked for me, so it’ll work for you.”  

Understand the Context

What works for one person might not work for another.  

Does the advice apply to your situation?  Consider your unique circumstances, goals, and challenges.  Advice for a 50-year-old man will probably be very different to that for a young woman just about to start her first proper job.

What are the risks?  Ensure the advice considers both the upside and potential downsides.  

Is it current?  Some advice can become outdated quickly, especially when there have been changes to tax law.  

Check for Biases

Advice can sometimes be skewed by personal or cultural biases.  

Is it overly optimistic or pessimistic?  Balanced advice will typically account for both the best-case and worst-case scenarios.

Assumptions

Is the advice based on assumptions?  Question whether the advice is grounded in evidence or just common myths and clichés.  Not all assumptions are bad though.  Just because someone uses assumptions in their working out, it doesn’t mean the working out is not valid.  It just means you have to consider the advice in the context of that assumption.  

For example, someone investing in a global index tracker using an assumed growth rate of 3% over 30 years is probably being conservative, whereas someone using an assumed growth rate of 12% is probably being unrealistic.  

Test It on a Small Scale

If the advice involves action, start small before committing fully.  

Can you experiment?  Try a pilot or scaled-down version to see if it works for you.  

Evaluate results.  Did the advice achieve the expected outcome, or were there unintended consequences?  

Seek Multiple Perspectives

Rarely does one person have all the answers.  

Ask others you trust.  Seek input from a diverse group of people with varying expertise.  

Consider counterarguments.  Challenge the advice by seeking out opposing views to ensure you’re not missing important nuances.  

When seeking advice, do not simply try to find someone who agrees with you to help you feel better about the choice you want to make.  Try to see the issue from all perspectives.  We will never know everything.

Trust but Verify

Your instincts can be valuable but don’t rely on them alone.  

Does it feel right?  If advice feels off or overly complicated, it might not be the best fit.  

Is it actionable?  Good advice should be clear, realistic, and actionable for your situation.  

Evaluate Long-Term Implications

Some advice might seem appealing now but could have negative consequences later.  

Will it benefit you in the long run?  Consider how following the advice aligns with your broader goals and values.

Will following the advice let you pass the “sleep well at night test”?  I would never be able to invest in a gambling company, for example, as it does not align with my own values.    

What are the opportunity costs?  By following one piece of advice, are you forgoing a potentially better option?  For example, will you be tying up money that could be used for something else?

Don’t Be Afraid to Ignore It 

Not all advice deserves to be followed.  

If advice doesn’t fit your vision or values, it’s okay to pass on it.  

Beware of anyone telling you there’s only “one way” to do something.  Rarely in life, at least in my experience, is there a single right answer, and a single wrong answer.  

The best advice empowers you, not controls you. It should help you make informed decisions rather than dictate your actions. By staying critical, curious, and cautious, you can filter out the noise and focus on advice that truly serves you.  

Or, as Professor David Kipping says,

“Stay thoughtful, and stay curious.”

The Real Question: What Do You Want Your Future to Look Like?

The idea that retirement is out of our hands is a myth. By taking control of your finances and making intentional choices today, you can decide when and how you retire.  

Don’t let outdated societal norms dictate your future. It’s your life, your money, and ultimately, your decision. The real question isn’t “when” you’ll retire, but “how” you’ll make it happen.  

What steps are you taking today to bring your retirement dreams closer? Let me know in the comments as I’d love to hear your thoughts!