Work vs retirement equation shows huge imbalance

Article date: 8 September 2010

  • Each year of retirement for today’s over 55s is funded by just under two years work
  • Some pensioners need to finance 30 years of retirement
  • Those starting work today could be retired for almost as long as they are in work.

Aviva’s latest Real Retirement Report reveals that for today’s 17.6 million over 55s, each year of retirement is funded by just under two years of work. The report, released today, looks at the "financial equation" behind retirement, and compares the average length of time in retirement to the average working life. The findings highlight the increasing problems the UK will face due to the trend towards people living longer while significantly under-saving for retirement.  

Financing retirement – the financial equation
Today’s over 55s will live for an average of 88 years, typically retiring at 63 years and six months. With an average of 44* years in work and a retirement lasting 25 years, each year of retirement is funded by just under two years of work. This is a difficult imbalance considering how little most people save towards their retirement every year.

Looking to the future
Even more worryingly, people starting work today** will live for longer, and are likely to start working later. Those hoping to follow in their parents’ footsteps and enjoy an early retirement at 60 could be retired for almost as long as they are working. So each year of retirement would need to be funded by just over a year of work.

Financing retirement
The largest single source of income for the over 55s is the Government Pension (24%) followed by employer pensions (16%) and wages (13%). However, as the Government has indicated that it will be looking more towards self-funding of retirement and fewer companies are offering generous pension schemes, this does not bode well for future generations.

Clive Bolton, "at retirement" director for Aviva, comments: “Many over 55s are worried about maintaining their standard of living and as today’s average retiree is looking to finance every year of their retirement with just under two years of work, these fears are justified. This financial equation is very worrying and simply doesn’t add up!  

“The equation becomes even more concerning, when you realise that the average person starting work today will live for longer – thus reducing the ratio of working years to years spent in retirement even further. Currently, the biggest income source for over 55s is the state pension but with longevity increasing, the Government has acknowledged that it will need to review the way it provides later life financing.

“All these factors highlight the simple fact that as a nation, we need to save more for retirement. With the high cost of living, we can’t all afford to put substantial amounts away each month but even small amounts add up over the years and will help to ensure that retirement is not characterised by a struggle to survive on a tiny income.”


Download a full copy of Aviva’s Real Retirement Report (PDF 0.90MB).

Press office contacts:
Sarah Poulter  - 01904 452828 / 07800 691569 /

The Wriglesworth Consultancy:
Lee Blackwell /Katie DePelet - 020 7427 1400 /  



Average lifespan

Average length of working life

Average length of time in retirement

Average time at work per year of retirement

All Over 55s




1 year 10 months

55 – 64




2 years 3 months

65 – 74




2 years

Over 75




1 year 6 months

* This assumes starting work at 17 and that a deduction is made for periods of economic inactivity, covering unemployment, maternity leave and sickness-absence.

** This assumes starting work at 22, which reflects an aging student population, and an average lifespan of 92 years.  Allowing for periods of economic inactivity, this means a working life of 36 years and a retirement lasting 32 years.

All longevity data was sourced from the office of national statistics and the remaining data was sourced from the Aviva Real Retirement Index. This report is a definitive look at the personal finances of the UK’s over 55 population. Not only does it look at personal wealth, income sources and expenditure patterns but also tracks how these change in the "three ages" of retirement.  

In addition to the regular data, each quarter a spotlight will be shone onto a different relevant topic with the longevity equation being the choice for September 2010. A press release highlighting the key points from Aviva’s Real Retirement Report can be found at:

Download a full copy of Aviva’s Real Retirement Report (PDF 0.90MB).

Notes to editors:

  • Aviva is the world’s sixth largest* insurance group, serving 53 million customers across Europe, North America and Asia Pacific
  • Aviva's main business activities are long-term savings, fund management and general insurance, with worldwide total sales of £45.1 billion and funds under management of £379 billion at 31 December 2009 
  • We are the largest insurance services provider in the UK and one of the leading providers of life and pensions products in Europe  
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* based on gross worldwide premiums at 31 December 2009

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