MENA Newswire News Desk: The average pension savings required for a basic retirement income in the UK have surged by 60%, reaching nearly £110,000, amid the ongoing cost-of-living crisis. A recent study by the Resolution Foundation, commissioned by the Living Wage Foundation, highlights this significant jump, with the necessary pension pot increasing from £68,300 in 2021-22 to £107,800 for 2023-24. The rise in costs is attributed to inflation and increasing expenses related to maintaining an adequate income post-retirement.
According to the research, retirees need an average annual income of £19,300 to meet basic living standards. However, the amount varies depending on factors such as relationship status and housing arrangements. For example, single pensioners who own their homes require approximately £13,500 annually, while couples in similar situations need around £20,600 per year. Those renting face even higher costs, with single renters needing an additional £6,900 annually, pushing their required income to £20,400.
The study emphasizes the financial pressures on retirees, especially those without homeownership. Housing costs have further exacerbated the situation for pensioners renting in the private sector, driving up the necessary savings for retirement. The full state pension alone is insufficient to cover these expenses, requiring workers to amass substantial additional savings.
Workers on the real living wage face particularly tough challenges. The study notes that saving for a pension pot of £107,800 is a steep climb, especially for younger workers aged 25-35. These individuals must save between 9% and 15.2% of their income, depending on career length and work hours, to reach this goal by the state pension age.
More than half (53%) of UK adults contributing to a pension doubt they will ever be able to retire, while 62% believe they will need to work past the traditional retirement age. These concerns are especially pronounced among low-paid workers, women, and renters, with many questioning their ability to secure a dignified retirement.
Katherine Chapman, director of the Living Wage Foundation, commented on the findings: “The rising pension requirements are alarming, particularly for low-paid workers already struggling with today’s costs. No one should have to choose between getting by now and saving for their future.” Chapman urged more employers to participate in the Living Pension accreditation, a program that helps workers save for retirement without facing poverty in later years.