Over-55s face retirement income 30% smaller than needed

Over-55s face retirement income 30% smaller than needed

Those aged 55 to 64 are facing retirement incomes around 30 per cent less than they would need for a comfortable retirement, according to research from True Potential Investor.

The data showed the average worker of over 55 expected an average annual retirement income of £15,890, which was 31 per cent below the £23,000 needed for comfortable retirement.  

The study involved more than 38,000 UK savers and found 22 per cent aged over 55 were planning to work beyond their retirement and 42 per cent were unhappy with their current financial position.  

Respondents aged 55 to 64 saved £92 a month into their pension over the last quarter of 2018, compared to average savings across all age groups of £358.

The maximum state pension in the UK currently is worth £8,545.50 a year, meaning a 20-year retirement would require a personal pension pot worth £289,090 to reach £23,000 a year.   

David Harrison, managing partner of True Potential Investor, said: "Auto-enrolment has gone some way to challenging the UK savings gap, but alone is not enough to protect everyone from an uncomfortable retirement.

"We need much greater access to adult financial education and greater simplicity and transparency from financial services providers.

"We also need further reforms to allow self-employed workers to benefit from auto-enrolment and a more ambitious increase in the minimum auto-enrolment contribution level.

"These measures would certainly help to prevent the situation some savers in our research are facing, although ultimately it is up to the individual to take responsibility for their long-term financial future."

Alistair Cunningham, financial planning director at Wingate Financial Planning, said: "Anyone who thinks that state pension and auto-enrolment will be sufficient to meet their retirement needs is likely to be in for a shock.

"Unfortunately provision of retirement income that could last several decades beyond someone’s working life is costly, and this puts many people off."

It comes after charity Age UK said that around 1.6 million pensioners were living in poverty, calling for more to be done to make older people aware of the benefits that are available to them.