06 Apr 2018
Nearly one in eight UK people stopping work this year have no retirement savings.
New research from Prudential also found that most of this
group will either be totally or somewhat reliant on the State pension.
This leaves them starting their retirement with an income of more than £1,000 a year below the Joseph Rowntree Foundation (JRF) minimum income standard for a single pensioner.
The findings are part of Prudential’s annual study – now in its 11th year – which tracks the finances, future plans and aspirations of people planning to retire in the year ahead.
There is some good news, however, as the 12% retiring without a private pension is lower than the 14% in 2017 and now nearly half the 23% recorded in 2008.
Women are more likely to have no retirement savings – 18% will retire without a private pension this year, compared with 7% of men.
The gap is also narrowing over time – in 2016, 22% of women had no retirement savings compared with 7% of men.
In 2008, the year the Prudential research began, a third of women were planning to retire without a private pension.
A tenth of those retiring in 2018 will either rely somewhat or solely on the State pension, which for those retiring after April will mean an income of £164.35 a week – or just over £8,500 a year.
Taking the JRF minimum income standard of £192.27 a week for a single pensioner, which is a benchmark of the income required to support an acceptable standard of living, those relying on the State pension will fall short of the minimum standard by £27.92 a week, or £1,452 a year.
Stan Russell, of Prudential, said: “The long-term trend for the number of people retiring without a (private) pension is down and that is good news. But there is still some distance to go and it is worrying so many people will be entirely reliant on the State pension for their income in retirement.
“While the State pension is an important part of retirement income, it shouldn’t be the only part and those still in work should, if at all possible, be contributing to a pension and saving towards their retirement.
"It is never too early to start saving into a pension and even a small amount each month can make a difference and help from a professional financial adviser can be invaluable in helping plan for retirement.”
The research highlights the significance of the State pension to people in retirement, including those with pension savings of their own. On average, people expecting to retire this year estimate that the State pension will account for more than a third of their income in retirement.
It can be hard to plan for tomorrow when we’re busy living for today, but if you begin planning and saving now you’ll have more options in the future.
Our independent financial advisers can help you devise the correct investment and saving strategy to allow you to enjoy the lifestyle you want when you retire.