Cost of living squeeze hits pensions

Most people dream of a comfortable retirement after years of hard work. Whether it’s travelling the world, spending more time with the grandkids, or generally living the good life. However, visions of a sunny retirement could be dashed as today’s ‘cost-of-living crisis’ risks becoming tomorrow’s ‘pensions crisis’.

New research from Nutmeg – in collaboration with Retail Economics – highlights a considerable gap between the amount that individuals believe they need for a ‘comfortable’ retirement income, and what they are actually on course to achieve – evidenced in a shortfall of £187 billion for those about to retire at 65, or £271,000 per person.

In today’s money, those aged 65+ suggested that they would need £29,500 of income (after tax) to live comfortably in retirement. However, analysis shows those who have private pension savings can expect to receive an annual income of around £16,500 – equating to a deficit of over £13,000. This deficit widens further, increasing to over £16,500 per year, if individuals without a pension (around 689,000 people) are included into the 65-year-old age group.

Ros spoke to finance expert Annabelle Williams

Photo by Colin Watts on Unsplash