Millions of savers face a pension 'cliff edge', as fewer than one in ten are on track for a comfortable retirement. New figures from Pensions UK's latest Retirement Living Standards reveal that savers need at least £13,900 a year in retirement.
Retirement Costs Soar
A single person now requires approximately £13,900 annually for a minimum retirement, while couples need £22,500. For a moderate standard, a single person needs £32,700 per year, and couples require £45,400. Those aiming for a comfortable lifestyle will need around £45,400 for an individual and £62,700 for a couple.
The state pension from the Department for Work and Pensions (DWP) is worth a maximum of £12,547 per year, leaving pensioners a staggering £32,800 short of a comfortable level.
Only 9% on Track for Comfortable Retirement
Studies show that 82% of the population will reach at least the minimum standard of living in retirement. However, only 23% will achieve a moderate lifestyle, and just 9% will enjoy a comfortable retirement.
Expert Warnings
Zoe Alexander, executive director of policy and advocacy at Pensions 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. Without action, too many risk facing a cliff edge drop in income when they stop work.'
Charlene Young, senior pensions and savings expert at AJ Bell, added: 'Without taking control of their pension pots, increasing contributions and making the most of the tax perks on offer, those currently saving for retirement will be forced to choose between working far longer or living on a pittance in their later years.'
Call for Action
Professor Matt Padley, co-director of the Centre for Research in Social Policy at Loughborough University, noted that the retirement living standards 'provide a real-world starting point for individuals in thinking about the sort of retirement they want, what this might cost, and how they might get there.' He added: 'We know that many people are not saving enough for retirement, but we also know that for some people it is simply impossible to save any more – you can't save money you don't have.'
Jamie Jenkins, director of policy at Royal London, commented: '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.'
