Pensioners in the UK are risk of £119,000 shortfall in their retirement savings and a “reduced standard of living”, according to a new report.
Standard Life’s Retirement Voices report is warning that retirees are increasingly finding themselves with smaller pension pots than anticipated.
Retirement savers are averaging only £131,000 in their pension pots, the insurance company’s research found.
This is a deficit of £119,000 for those who are preparing to retire with savings worth around £250,000 which Standard Life’s survey determined Britons hope to have.
Based on current annuity rates, savings of this amount mean someone’s monthly income would be £1,007, or £12,091 a year, if they retire by the state pension age.
In comparison, a pension pot worth £131,000 translates to an annual income £6,332 and £527 monthly, which is £5,759 a year less.
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Pensioner risk not having enough money saved in retirement, new research has found
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Notably, the Pensions and Lifetime Savings Association's (PLSA) Retirement Living Standards determined £131,000 in pension savings, falls of its "moderate" standard of living.
According to PLSA, retirees need £31,000 a year to be able to fund this quality of living standards.
In its report, Standard Life’s survey found that half of retirees wishes they had through about retirement planning from a younger age.
Furthermore, 54 per cent of retirees wished they had saved more, while 53 per cent wished that they had started saving earlier.
Dean Butler, the managing director for retail direct at Standard Life, warned that retirement planning can be difficult for many people who are wanting to bolster their pensions.
He explained: “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.”
Citing the cost of living crisis, Mr Butler described the gap between what people want to have saved and what they really do have in their pensions as “unsurprising”.
However, he acknowledged that this gulf results in a “significantly reduced standard of living in retirement”.
Morgan Vine, the head of Policy and Influencing at Independent Age, noted that one in six older people currently live in poverty in the UK.
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Retirees need a defined contribution pension pot of £638,000 to live “comfortably” from 67 to 100, research suggests GETTYVine said: “The pensions system is incredibly complex.
"Ensuring people feel as informed and supported as possible is vital because not everyone is financially comfortable in later life, and many don’t have large pension pots.
“Currently, one in six older people live in poverty and this increases to one in five for those approaching state pension age. These are huge and unacceptable numbers.
“Everyone deserves the security of knowing they can have their essential needs met in retirement, and while many people are saving into private pensions, it’s vital that there is a strong foundation in the form of the State Pension and the social security system.”