One in seven 2015 retirees have no pension savings
One in seven people retiring this year have saved nothing into a pension and will be relying almost entirely on the state pension to survive, research by Prudential has found.
In addition, one in six will retire in 2015 with expected income below the 'poverty line' minimum for a reasonable standard of living.
A couple relying entirely on the state pension will find themselves skimming only slightly above the lower limit of income on which you can fund an acceptable standard of living. The Joseph Rowntree Foundation says £9,500 is the lowest income that allows an "adequate standard of living".
A single pensioner relying entirely on the state pension of £115.95 a week has a total annual income of just over £6,000, well below this limit. A retired couple who both qualify for the full state pension will receive a combined £231.90 a week, or marginally over £12,000 a year.
Another benchmark is the common measure of the 'poverty line' - usually set as 60% of the median household income - which according to figures from the Department of Work and Pensions comes out at £224 per week, meaning a married couple relying entirely on the state pension will be only narrowly above this.
On average, the state pension will make up just over a third of retirees' income.
"The reforms to the ways that people can use their pension savings, that came into effect in early April, present retirees with many new life choices," says Prudential's retirement income expert Vince Smith-Hughes.
"However, only those with their own pension savings will be able to benefit from the new choices, while people who rely solely on the state pension are likely to have to face serious financial belt-tightening when they give up work."
Promisingly, 54% of this year's retirees feel financially well-prepared for retirement, up from 47% last year. However, women are more likely to feel unprepared than men.
This article was written for our sister website Money Observer
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