Millions of retirees issued new £29,000 savings warning | Personal Finance | Finance
Brits are being warned about needing to save almost £30,000. Experts at Unbiased warn that savers could need an extra £28,993 a year, on top of today’s estimates, just to maintain a comfortable lifestyle.
According to the latest Retirement Living Standards from the Pensions and Lifetime Savings Association (PLSA)1, a single person currently needs £45,400 a year after tax to achieve a comfortable retirement, including lifestyle luxuries like regular holidays and dining out.
For couples aiming for the same comfortable standard of living, the current joint requirement is £62,700 a year. Even for more modest lifestyles, the baseline costs are notable, with a moderate retirement requiring £32,700 a year and a minimum standard costing £13,900 for a single person.
However, if inflation averages 2.5% over the next 20 years, Brits currently in their 30s and 40s will see the goalposts shift significantly. By 2046, the annual cost of a comfortable retirement for a single person will jump by £28,993 to £74,393, while a couple will face a massive £40,041 inflation penalty, pushing their required joint income to £102,741 a year.
Meanwhile, a moderate retirement for an individual will require an extra £20,883 (rising to £53,583), and even a minimum baseline lifestyle will face an £8,877 hike, pushing the basic survival cost up to £22,777 a year.
The latest Pensions Commission report2 revealed that 45% of working-age adults – roughly 18 million people – are not saving into a pension at all, meaning a large portion of the UK workforce is completely unprepared for the cost of living after work.
Tim Grimsditch, managing director of Unbiased, explained: “People look at a 2% or 3% inflation rate and assume it sounds manageable. What they often miss is the cumulative impact this has over the course of a career. It steadily erodes purchasing power, meaning the retirement target you are aiming for today will look very different by the time you stop working.
“Trying to fund your future based purely on current figures is an easy trap to fall into. Because the true cost of retirement is a moving target, relying on guesswork puts your lifestyle at risk.
“If you are unsure about how these shifting goalposts will affect your plans, you can use our pension guide to better understand your options, maximise tax relief, and keep your retirement savings on track.
“Taking professional financial advice early on is a practical way to build an adaptable plan that protects your lifestyle, helping to ensure you can achieve the standard of living you expect in retirement.”
