State pensioners are set to lose up to £42,700 each following a change in the state pension age, with Gen Z individuals potentially losing as much as £69,900 in state pension income as the age rises to 68.
According to new analysis by Rathbones, a person aged 25 today could miss out on two years of state pension payments, worth approximately £69,900. Meanwhile, a 45-year-old could forgo about £42,700 if the Department for Work and Pensions (DWP) raises the state pension age to 68 instead of maintaining it at 66. These figures are based on the new full state pension of £12,548 per year, increased annually by 2.5% under the triple lock system.
Expert warnings on pension affordability
Ed Wood, financial planning director at Rathbones, commented: “The elephant in the room for younger generations is that they are likely to face a less generous state pension system than many retirees enjoy today, pushing the bar much higher for what they need to save themselves.” He noted that many young adults request retirement modelling for a worst-case scenario of no state pension. “With people living longer and public finances under strain, serious questions are being asked about the long-term affordability of the triple lock – with the Institute for Fiscal Studies warning it could cost up to £40 billion a year by 2050.” Wood added that the responsibility increasingly falls on individuals to build a robust retirement pot themselves.
Savings needed for comfortable retirement
Rathbones analysis indicates that a single person retiring today at 65 may need approximately £796,000 in savings to fund a comfortable retirement, rising to £913,000 for a couple, assuming the state pension is paid throughout retirement.
Rebecca Williams, financial planning lead at Rathbones, said: “People often ask us if there’s a single ‘right’ number to aim for when saving for retirement. There isn’t, but age matters enormously. Inflation quietly erodes even large sums over time, and for younger generations that challenge is compounded by high housing costs, student debt and the cost of living – making it harder to save early, when every pound has the greatest impact.” She emphasised that starting early, saving consistently, and making the most of workplace pensions and employer contributions can make a powerful difference over time.
