Brits with less than £45,000 earned annually have been issued a warning by financial experts. A recent release from Pensions UK has flagged a top up to the cash value needed to be comfortable in retirement.
The increase from £33,600 to £45,400 earned annually is, according to The Telegraph, set to put 90% of workers in a danger zone where they will no longer be able to live “comfortably” in retirement. Pensions UK released new information regarding the cost of retirement, with a 35% increase over four years noted.
The report found that just 9% of the current workforce has enough to enjoy a comfortable retirement. A comfortable retirement is defined as having enough money to eat out weekly, enjoy a two-week holiday in the Mediterranean each year and replace their car every five years.
It also revealed that nearly one in five people (18%) are failing to save enough even to meet the “minimum” retirement lifestyle. This basic retirement requires £13,900 a year for a single-person household, or £22,500 for a couple, according to the research.
Those hoping to retire comfortably will now need an annual income of £45,400 a year, an increase of £11,800. To have an income of £45,400 each year, an average pensioner would need to be taking around £55,000 from their retirement savings and state pension a year before tax, The i Paper reported.
Prof Matt Padley, of the Centre for Research in Social Policy at Loughborough University, which carried out the research, 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.
“The Retirement Living Standards can help us to think through the roles of the state, employers and individuals in ensuring everyone is able to have at least a minimum standard of living in retirement.”
Lily Megson-Harvey, Policy Director at My Pension Expert, said that the “figures are a stark reminder that too many people are still heading towards retirement without enough saved to maintain the lifestyle they may be expecting.
“A cliff-edge drop in income can be a real shock when people stop work, particularly as rising living costs continue to push up the cost of retirement. For many savers, the challenge is not just whether they have a pension, but whether it will go far enough.
“That is why engagement with pensions needs to happen much earlier. Reviewing contributions, checking whether you are on track, and making use of tools such as annual statements and retirement income forecasts can all help people understand where they stand.”
