Figures from the Pensions and Lifetime Savings Association found a single person would need £12,800 a year for a minimum standard of living in retirement. This compares with £23,800 a year for those who want a moderate standard of living, while those who want a comfortable retirement would need £37,300 a year, an increase of almost £4,000 compared to last year.
Analysis from AJ Bell found a person who wants a minimum standard of living in retirement needs £52,000 in pension savings.
Those who want a moderate standard of living need £345,000 in their pension pot while those who would like a comfortable retirement need £755,000 a year.
Tom Selby, head of retirement policy at AJ Bell, said: “It is a sad fact that people on the lowest incomes are, on average, facing the biggest challenge, as they tend to spend larger proportions of their income on things like food and energy, both of which have seen eye-watering price rises over the last 12 months.
“That said, retirees are facing painful increases in living costs across the board, with the spending needed for a single person to enjoy ‘moderate’ and ‘comfortable’ living standards in retirement increasing by 12 percent and 11 percent, respectively.”
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“While this might involve unpleasant choices, most people don’t want to be left relying on their state pension alone in their later years.”
According to the Telegraph, after a lifetime of saving, the average UK pension pot is worth £37,600, for those between 55 and retirement age.
This puts the average UK pension pot income is around £12,000 a year, including a full state pension, well below what is needed for a moderate retirement income.
Tony Clark, head of Retirement Marketing at St James’s Place said: “The good news is that through a combination of the full state pension and auto-enrolment in a workplace pension, the minimum level should be achievable for most people.
“But current minimum contribution levels are not enough to get average savers over the line from a minimum to a moderate lifestyle standard.
“That’s why it’s vital that they are provided with the education, tools and advice to make better and more proactive investment decisions during their working lives.”