13 May 2024
UK adults face a significant shortfall in their pension savings at retirement compared to what they wanted to retire on, according to research from Standard Life.
Standard Life's Retirement Voice Report found that, on average, retirees had hoped to build up a pension pot of £250,0001. However, the average amount that they accumulated by retirement was £131,000 – leaving a £119,000 shortfall.
Based on current annuity rates, a pot of £250,000 could lead to an income of £1,007 monthly, or £12,091 a year, assuming a retirement age of 66.
A pot of £131,000 could result in a monthly income of £527 in retirement, or £6,332 yearly - £480 month, or £5,759 a year less.
However, the not insignificant £250,000 pot falls short of a 'moderate' standard of living in retirement according to the PLSA, including the State Pension.
Dean Butler, Managing Director for Retail Direct at Standard Life said: 'It can be hard to work out how much you need to save to achieve your desired standard of living in retirement, particularly earlier on in your career. It's even harder to stick to it, as everyday expenses and those one-off costs that come up in life constantly threaten to move long-term saving down the priority list.
'Clearly there's a big gap between what people hope to save, and what they actually do – this is unsurprising, particularly when looking at it during a cost-of-living crisis, however the result can be a significantly reduced standard of living in retirement.'