Three-quarters of UK workers are not saving enough to achieve a moderate standard of living in retirement, according to new analysis from the pensions industry, raising concerns that many people face a significant drop in income when they stop working.
Industry body Pensions UK said just 23% of the working population are currently on track to achieve what is considered a “moderate” retirement lifestyle. Based on the latest retirement living standards, this would require an annual income of £32,700 for a single-person household and £45,500 for a two-person household.
The findings suggest that while most workers are likely to achieve a minimum standard of living in retirement, many remain well short of the savings needed to maintain their pre-retirement lifestyles.
According to the research, a minimum retirement lifestyle requires annual income of £13,900 for an individual or £22,500 for a couple. Around 82% of people are expected to meet this threshold.
By contrast, a comfortable retirement would require annual income of £45,400 for a single person and £62,700 for a couple, levels that remain out of reach for a large proportion of the population.
The retirement income benchmarks include everyday living expenses such as food, household bills, transport, leisure activities and hobbies. However, the calculations assume retirees receive the full State Pension and do not have to cover housing costs such as rent or mortgage payments.
Pensions UK warned that without increased contributions, many workers risk facing a “cliff-edge” reduction in living standards upon retirement, highlighting the growing challenge of ensuring adequate retirement savings in an ageing population.
