Financial advisers and money experts have responded to Pension UK's updated Retirement Living Standards (RLS) report, which shows that under a quarter of people are predicted to have a moderate standard of living in retirement.
They say that, for anyone in their 50s who has not saved enough for their retirement, "now is the time to confront the numbers." However, they add that "it's not too late" if people act soon and get a plan in place.
The annual standards, calculated by the Centre for Research in Social Policy at Loughborough University, now show that a Minimum retirement lifestyle costs £13,900 a year for a one-person household and £22,500 for two people. A Moderate lifestyle costs £32,700 for one person and £45,400 for two, while a Comfortable lifestyle costs £45,400 and £62,700 respectively.
The figures reflect increased everyday costs across spending categories such as food, essential household bills, transport, as well as social activities and hobbies.
Pension UK expects around 82% of the working population to reach the Minimum standard of living in retirement. However, this falls to just 23% reaching a Moderate standard and 9% reaching Comfortable. It says the findings are out of step with what some people expect for their retirement — and that without higher levels of saving, there is a risk that many will face a significant drop in income when they stop working.
Expert Reactions
Zoe Alexander, Executive Director of Policy and Advocacy at Pension UK, said: "The latest update to the Retirement Living Standards underlines a clear reality for many people: today's saving levels will not be enough for the retirement they expect. It is expected that around 82% of people will reach a Minimum standard of living, but far fewer will go beyond that. That is out of step with what people expect for their future. Without action, too many risk facing a cliff-edge drop in income when they stop work. The Government is right to be considering whether minimum contributions need to rise through the work of the Pensions Commission."
Alexander added: "In the meantime, tools like the RLS play a crucial role by helping people take control and understand what they might need, so they can put more money away where and when they can. We also encourage people to speak to their employer and see whether the organisation is prepared to support them to save above the minimum, such as higher rates of matching pension contributions. This could help 'bridge the gap' until policy catches up and we see higher savings levels set in legislation."
Advice for Those in Their 50s
Speaking to Newspage, Gosia Dawson, Director at Glade Financial, said: "If you're in your 50s, now is the time to confront the numbers. Understand what income your pensions could realistically provide, identify any shortfall, and take action while you still have earning power on your side."
Philly Ponniah, Chartered Wealth Manager and Financial Coach at Philly Financial, said that "for people in their 50s, the good news is that it's not too late." She continued: "The worst thing you can do is assume you've missed your chance. Start by getting clarity on what pensions you already have, what income they might provide, and what gap needs filling. Even small increases in pension contributions can make a meaningful difference over the final 10 to 15 years of working life, particularly when combined with employer contributions and tax relief. The key is taking action now rather than hoping things will somehow work out."
