A leading pensions industry body has cautioned UK workers about a sharp drop in income when they retire, urging people to use updated financial benchmarks to better understand what their post-work life might look like.
Retirement Living Standards Updated
Pensions UK issued the warning alongside newly revised 'retirement living standards,' developed by the Centre for Research in Social Policy at Loughborough University. The figures set out three tiers of retirement lifestyle.
A minimum standard costs roughly £13,900 a year for a single person and £22,500 for a couple. A moderate lifestyle runs to £32,700 and £45,400 respectively, while a comfortable retirement requires around £45,400 for one person or £62,700 for two - meaning individuals would need to have accumulated approximately £845,000 in pension savings to fund that top tier.
Expert Warning on Savings Gap
Zoe Alexander, executive director of policy and advocacy at Pensions UK, told The Times: '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.'
She added: 'Without action, too many risk facing a cliff edge drop in income when they stop work. 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.'
Only 9% Achieve Comfortable Lifestyle
Pensions UK says it expects that about 82% of the working population in the UK will reach the minimum level, while only 23% will reach a moderate standard and only 9% to achieve a comfortable lifestyle.
The organisation added that housing costs are not included within the retirement living standards, meaning calculations will greatly differ across different personal circumstances and geographical location.
Jamie Jenkins, director of policy at Royal London, said: 'Although many are on track for a minimum standard, overall financial resilience in retirement is still a long way off. Encouraging people to start saving earlier and saving more could make a significant difference.'
