According to figures released by the Office for National Statistics, the number of pensioners in the UK will rise by a third over the next 25 years – 16.1 million compared to the 12.3 million last year – while the number of over-85 year olds will triple to 3.6 million.
The increase will be felt when the baby boomer generation – those born in the 60s –hits old age, with this rapid rise in the UK's ageing population (combined with the fewer number of workers to provide for them) fuelling concerns of a serious state pension deficit, despite the two planned rises in state retirement age.
The wider population is also set to grow over the next 25 years, with it expected to reach 73.3 million by 2037, but the proportion of those of working age is thought to grow at a much slower rate. In fact, by then there could be only 2.47 workers for each retired person in the UK, compared to the 3.21 workers per retiree last year.
According to industry experts we're facing a clear pensions crisis, and with life expectancy continuing to rise there are fears that an increasing number of people will suffer financial hardship in later life.
People won't be able to rely on the state to enjoy a comfortable retirement, and with personal pension saving still not at a level needed to ensure a decent retirement income it could lead to more people continuing to work after 65.
In fact, a survey from Partnership confirmed this, finding that 71% of 50-65 year olds are expecting to need some form of supplementary income after retirement – a figure that could grow if people don't start saving.
This has led experts to urge people to take a long-term view on their savings. With retirement being longer people will need a bigger pension pot to cover it, and additional savings could well be necessary to supplement an annuity income. Saving for the future should be a priority with workers being urged to start saving from as early as possible, either through auto-enrolment, personal pension schemes or additional savings plans – or ideally a combination of all three.
Meanwhile, those approaching retirement age need to think carefully about their options, looking into the different kinds of annuities (and other pension products available) and comparing quotes to get the best rates and ensure they'll have a suitable income throughout their retirement.
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