One in seven people planning to retire this year will be doing so without a pension, according to new figures from Prudential.
The research is part of Prudential’s latest annual “Class of…” survey, which records the future plans and aspirations of people planning to retire this year.
Fourteen percent of those retiring this year will have no personal pension in place, and be heavily or totally dependent on the State Pension for their retirement income. For the average person retiring this year, the State Pension will account for 35% of their retirement income.
Worryingly, the figures indicate that almost 1 in 5 of the class of 2014 will retire with an income below the Minimum Income Standard, as defined by the Joseph Rowntree Foundation (JRF). The JRF estimates that a single pensioner needs an income of at least £8,600 a year to reach a minimum socially acceptable standard of living. A retired couple would need more than £12,500.
According to the report, women are almost three times as likely as men to retire with only the State Pension; 20% of women have no pension savings compared to 7% of men.
Vince Smith-Hughes, retirement income expert at Prudential, commented on the findings:
“The changes to pensions and how people can take their retirement income announced in the Budget last month will provide savers and retirees with more choices. However they don’t alter the fundamental fact that many people are not saving enough for a comfortable retirement.”
“It is also important to avoid falling into the trap of overestimating the contribution that the State will make to your retirement income, as the State Pension alone is barely sufficient.”
“Simply saving as much as possible as early as possible in your working life and seeking professional financial advice in the run up to retirement will help to make the most of your savings when you’re ready to stop working.”