As many as 14% of people retiring in 2017 have not made any financial provision for their retirement, according to the latest research from Prudential. This figure includes 11% who will be reliant on the state pension to support them throughout their retirement.
As a result, these individuals will be starting their retirement on £1,400 a year less than the minimum income standard laid down by the Joseph Rowntree Foundation.
The organisation that campaigns for social change says that a single pensioner needs an income of at least £186.77 a week to have an acceptable standard of living in retirement.
A pensioner retiring after 6 April this year would have a maximum weekly state pension of £159.55 a week or just under £8,300 a year.
Women were more than twice as likely to be retiring without adequate private provision, with 19% of women having no company or private pension, compared to 9% of men. However, on a more positive note, this is at least an improvement on last year, when women were three times more likely than men to be retiring without a pension.
Stan Russell, retirement income expert at Prudential, says: “The state pension is a vitally important component of pensioners’ incomes – especially as the ‘triple lock’ ensures that it increases in value every year. People throughout their working lives should be doing everything they can to ensure that they are entitled to the full amount of state pension, including making voluntary National Insurance contributions to cover any missing years.
“However, for many working people the state pension will always be viewed as just one aspect of retirement planning. It is therefore concerning that some pensioners due to retire this year will rely solely on the state pension. While saving is not always easy, especially when the multitude of costs in everyday life get in the way, it is important to save as much as you can from as early as you can, to help avoid financial struggles during retirement.”
Of those people retiring this year who have saved for their retirement, 42% have the bulk of their savings in a final salary company pension scheme, 13% have their money in a workplace personal pension, while another 13% have theirs in a private personal pension. The remainder have invested their savings in a self-invested personal pension (Sipp) or stakeholder pension (6% respectively). On average, retirees anticipate that the state pension will make up 35% of their total income.