Amount needed for comfortable retirement jumps by £1,500 a year – and most people aren’t saving enough | Money News

Think you’re saving enough to ensure a comfortable retirement? According to Pensions UK, there’s a significant number of people who aren’t.

They are at risk of a retirement “cliff-edge” fall in income when they stop work, the pensions industry body warned, as it published updated retirement living standards.

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These are calculated by the Centre for Research in Social Policy at Loughborough University and set out three lifestyle levels in retirement:

• Minimum, covering basic needs with some money left over for discretionary spending – costs about £13,900 annually for one person (up £500 from last year) and £22,500 for two (up £900)
• Moderate, offering more financial security and flexibility – costs £32,700 for one person (up £1,000) and £45,400 for two (up £1,500)
• Comfortable, with more financial freedom and some luxuries – costs around £45,400 for one person (up £1,500) and £62,700 for two (up £2,100)

Pensions UK said it expects around 82% of the working population across the UK to reach at least the minimum standard of living in retirement. However, this falls to just 23% reaching a moderate standard and less than one in 10 (9%) enjoying a comfortable lifestyle.

And the lifestyle levels do not include housing costs, it warned, as these vary significantly depending on location and personal circumstances – some people will own a home outright when they retire, for example, while others may still have a mortgage or be renting.

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Zoe Alexander, executive director of policy and advocacy at Pensions UK, said today’s saving levels “will not be enough for the retirement” many expect.

“Without action, too many risk facing a cliff-edge drop in income when they stop work.”

The state pension is determined by the triple lock, which means it will rise every year by whichever is highest: inflation in September, average weekly earnings from May to July, or 2.5%.