Almost one in eight people who are set to retire this year will have no pension savings to rely on, according to new research.
Prudential’s annual ‘Class of 2018’ study reveals that women are twice as likely as men to have no pension savings, with some 18% of those set to retire in 2018 having no retirement savings in place, compared to 7% of men.
On a more positive note, the proportion of people retiring with no pension has fallen from 23% in 2008 to 12% this year.
One in 10 people due to stop working this year will rely solely on the State Pension for their income through retirement, which will be £164.35 a week in the 2018/2019 tax year.
Even those who do have savings expect the State Pension will account for a third of their retirement income. Savers are also relying a little more on the State Pension for a greater proportion of their income. In 2008, the State Pension accounted for 32% of retirees’ total income, compared to 33% today.
Stan Russell, retirement income expert at Prudential, says: “The number of people retiring without a pension is down and that is good news, but there is still some distance to go and it is worrying so many people will be entirely reliant on the State Pension for their income in retirement.”
People with no retirement savings of their own will have to manage of an income well below the Joseph Rowntree Foundation’s Minimum Income Standard. This is a measure of what people estimate for an acceptable minimum standard of living.
It reveals that the minimum income for a single pensioner is £192.27 a week – leaving those relying solely on the State Pension short by £27.92 a week or £1,452 a year.
Mr Russell adds: “While the State Pension is an important part of retirement income, it shouldn’t be the only part and those still in work should, if at all possible, be contributing to a pension and saving towards their retirement.”