Too many people face a significant drop in income when they retire, with the majority unlikely to save enough to maintain a moderate standard of living, according to a new report from Pensions UK.
The trade body estimates that a moderate retirement lifestyle now requires an annual income of £32,700 for a single person and £45,400 for a couple. However, just 23% of working-age people are currently on track to reach that level.
The findings highlight growing concerns about retirement adequacy as rising living costs push up the amounts people need to save. Pensions UK estimates that a minimum retirement income now stands at £13,900 a year for a single person and £22,500 for a couple. Around 82% of workers are expected to achieve this level.
For those seeking a more comfortable retirement, the income required rises to £45,400 for an individual and £62,700 for a couple. The report suggests only 9% of workers are on course to meet that target.
The figures are based on retirement living standards developed independently by the Centre for Research in Social Policy at Loughborough University. The calculations reflect expected spending on essentials and everyday activities, including food, transport, leisure and holidays, but exclude housing costs.
Pensions UK said higher spending on food and social activities had pushed retirement costs up over the past year, broadly in line with inflation.
The organisation is calling on workers, employers and the Government to take further action to strengthen retirement savings. Its warning follows renewed Government attention on pension adequacy, including the revival of the Turner Pension Commission, which previously led to the introduction of automatic enrolment into workplace pensions.
Talk to us about your finances.
