State pension shortfall warning as single pensioners face £3,300 income deficit
State Pension Shortfall Day for single pensioners falls today
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Pension savers are being urged to plan for retirement, as the full state pension falls short compared to pensioners’ average annual spending.
The average single pensioner spends £267.30 a week or around £12,900 a year, according to the latest Office for National Statistics (ONS) figures.
With the full new state pension currently at £10,600 a year, single pensioners face an average shortfall of £3,300 a year, meaning they’d need to rely on private pension income or other savings to bridge the gap.
Illustrating the shortfall, should the amount have been paid from January 1 at the average expenditure rate, today would be the day the average single pensioner has spent the equivalent of a full state pension and have to start relying on their own funds.
Pension savers are being urged to plan ahead for retirement
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The notional day, referred to as State Pension Shortfall day, falls with nearly three months of the year left to go.
Stephen Lowe, group communications director at retirement specialist Just Group, commented: “At a time when the state pension is under the spotlight, State Pension Shortfall Day sets out how the income it provides matches up to the amount the average retiree spends over the course of a year.
“Although the state pension looks set to be boosted by a second significant increase it is unlikely it will provide more than a very basic income.
“‘Shortfall day’ is a notional date given state pension payments are spread through the year, but it highlights the need to build up extra pension or other savings to provide that valuable extra income in later life.”
The calculations assume pensioners get the full new state pension, however not everyone does qualify for this amount.
A two-person retired household spends proportionately less per person on average, due to many expenses being shared but not twice the price.
It means pensioner couples’ average annual spend is £492.60 per week or £25,615 a year.
If both parties in the couple got the full new state pension, totalling annual income of £21,200, they would face a deficit of £4,415. It would mean their notional State Pension Shortfall Day would be on October 29.
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People don't necessarily get the full state pension, as it's dependent on National Insurance qualifying years
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The calculations highlight the extra financial burden being shouldered by single pensioners in retirement.
Mr Lowe added: “This year’s data also uncovers the financial disadvantage that single pensioners face as they tackle bills, repairs and everyday costs on one income.
“It’s a difficult conversation to have but as couples plan for retirement they would do well to remember that one of them is likely to outlive the other and factor this into their financial arrangements.”
People can check how much state pension they are likely to get, plus find out how to increase it, if they can, via the government's "Check your state pension forecast" tool.