According to Retirement Living Standards, a single pensioner would need a pension income of £11,000 a year to live an ‘essential level’ lifestyle in retirement. To live moderately, a pensioner would need £21,000 a year and, to live a more comfortable lifestyle (long-haul holidays and new car etc) people would need £34,000 a year.
The current full new state pension provides pensioners with £9,628 a year.
This means that a retired person may need between an additional £1,372 and £24,372 a year to hit these targets.
To reach either of these targets, they would need an estimated pension pot of £21,250 to £523,100 respectively.
If people don’t own their own home, they will need to aim for a higher income and pension pot to cover their monthly housing costs.
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According to the telegraph, after a lifetime of saving, the average UK pension pot stands at £37,600 for those between 55 and retirement age.
This puts the average UK pension pot’s income at around £12,000 a year (including a full state pension), well below what is needed for a moderate income in retirement.
Tony Clark, Head of Retirement Marketing at St. James’s Place said: “There’s still a long way to go in terms of raising awareness.
“It’s vital to realise that building a decent retirement pot means being engaged with the process early on.
“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.”
Britons are encouraged to discuss their retirement income with a financial adviser as they can give an idea of what someone’s retirement income will be, based on how much they’re saving.
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If people are concerned about not having a comfortable retirement income, it can pay to take professional advice about how to increase the size of your pension pot.
Research shows that, on average, UK savers improve their pension wealth by £30,991 by taking advice.
Britons may also want to look into finding any lost pension pots, which they may be missing out on.
There is an estimated £19.1 billion in lost pensions in the UK, and finding a lost pension could significantly boost your pension pot.
If someone has had multiple jobs or moved house, they are at risk of having a lost or forgotten pension.
The average lost pension is estimated to be worth £23,000 so tracking down one of these can immediately add thousands into their pension pot.
Tracking down lost pensions can be time consuming, so getting someone else to help can save people time and stress.
Additionally, pension charges eat into one’s investment returns and can have a significant impact on the amount they end up with at retirement.
Research from Profile Pensions shows, on average, people pay five times too much for their pension, and reducing these high charges saves an average of £23,000 over 20 years.