I’m 29, earn £70,000 – and planning for a retirement without the state pension

At 29, Naythan Rafferty is a long way off retirement. But despite his age, he is already piling cash into his private pension and ISA to ensure he is financially secure in his golden years over his concerns about rises in the state pension age. The state pension age is currently 66, and was due to gradually rise to 68 between 2044 and 2046. But the Office for Budget Responsibility, the Government’s fiscal forecaster, warned in a report published this week that this may need to be brought forward to 68 between 2037 and 2039. Rafferty, a software engineer who earns £70,000 per year, fears that by the time he retires, the state pension may not exist or the Government will make it means-tested in a bid to boost its coffers. Rafferty, who lives in Belfast, Northern Ireland, told The i Paper: “Thankfully, I feel I am not struggling too much for money. In all my financial planning, it might feel like I am catastrophising, but at 29 I do not know if I will get the state pension.” The Government is struggling to fund the state pension due to an ageing population, declining birth rates, and costs of the triple lock, the latter estimated to cost £12bn a year. Some experts told The i Paper they believe the state pension age will increase to 70, even if the triple lock is abolished – a guarantee which ensures it goes up each year in line with either inflation, wage increases or 2.5 per cent. The 29-year-old is investing £700 per month into his work pension, which is topped up to £1,200 by a £500 contribution from his employer. Other steps he is taking to save for his future include investing in indexes and bonds. He is also putting cash he earns over the higher 40 per cent tax bracket – which kicks in on earnings exceeding £50,270 – into his stocks and shares ISA – which allows him to invest up to £20,000 per tax year tax-free. Rather than relying on the state pension, Rafferty is planning to retire in his early 50s and live off funds in his ISA, until he can claim his private pension. Discussing his shrewd financial planning, he said: “I just thought I should throw as much money into this as I can. I am using this ISA as a bridge to retirement. If I can’t claim the state pension until I’m 70, what quality of life am I going to have to enjoy and it isn’t clear if the age for claiming it will rise further. I am trying to plan for retirement using my own investments. “I just think it is getting a little hard to rely on the state pension and it makes me think I won’t be able to use it or it won’t exist altogether. I thought I should throw as much money into them as I can so I am prepared for this.” Rafferty blames a “lack of financial planning” by the Government on state pension age hikes. He believes that to ensure the state pension is preserved, it should try harder to boost the economy by doing things like allowing more oil and gas drilling in the North Sea and encouraging people to have more children so there are more people in the country’s workforce. He said: “If people were still having five kids like in the baby boomers generation, that would help us. We need to ask how do we encourage people to have more children. A better looking population pyramid makes the pension age look better.” The minimum age to access most private and workplace pensions is currently 55, but this is rising to 57 from 6 April 2028. Steve Webb, a former pensions minister, said workers under the age of 40, and “particularly the under-30s”, are “at risk” of the pension age hitting 70. The annual cost of the state pension is already about £150bn and is expected to rise from 5 per cent of GDP to 9 per cent over the next 50 years without a change of policy, according to the OBR.