It’s a worrying time for many in retirement – the cost of living crisis has made it even harder to secure a comfortable life after work.
The bad news? The amount of money you need in your pension pot to live a ‘basic’ life has jumped by 60% in just three years.
A big gap to fill
Experts at the Resolution Foundation and the Living Wage Foundation have crunched the numbers. They’ve found that the average pension pot needed for a basic standard of living has shot up from £68,300 in 2020-21 to a staggering £107,800 in 2023-24.
What’s considered ‘basic’?
This figure means you need an annual income of £19,300 in retirement to cover the essentials. But that’s just an average. Whether you own or rent your home, and whether you’re single or a couple, all have a big impact.
The state pension is not enough
The full state pension is now £221.20 a week, or £11,502 a year. This means you’ll need a hefty chunk of savings to reach that £19,300 target.
It’s not just about pensions
Other experts have also sounded the alarm. The Pensions and Lifetime Savings Association has shown that the cost of living crisis has pushed up the estimated amount needed for different retirement lifestyles:
- Minimum: £14,400 a year
- Moderate: £31,300 a year
- Comfortable: £43,100 a year
The worry is real
A recent poll found that over half of UK adults saving for retirement are worried they’ll never be able to retire. Two thirds think they’ll have to keep working for years beyond their planned retirement age.
What’s the outlook?
This news is particularly worrying for those on low incomes, women, and renters, who are feeling the squeeze most acutely. It’s a stark reminder that we need to be saving as much as possible, and looking at ways to boost our retirement income.