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Pensioners need nearly £69,000 more than in 2022 to enjoy a ‘comfortable’ retirement

Written By:
Guest Author
Posted:
22/08/2023
Updated:
22/08/2023

Guest Author:
Matthew Browning

Soaring inflation and the high cost of living is hitting all generations as research from an investment firm reveals the amount of money needed for a ‘comfortable’ retirement has gone up by £68,700 in just a year.

Analysis from interactive investor, updated for the latest inflation figures in July 2023, reveals that pensioners now need a total income of £47,700 in July 2023 for a comfortable retirement compared to £43,500 in April 2022.

That equates to £37,100 private pension income, assuming they get a full state pension of £10,600, compared to £32,900 private pension income in April 2022, an increase of £4,200 each year.

To generate that £4,200 additional pension income, pensioners would need a private pension pot of around £598,700, an additional £68,700 compared with April 2022.

For those pensioners living a “no-frills” retirement, which is defined by the Pensions and Lifetime Savings Association as a basic standard of living with no budget for a car, around £40 a week for food and one holiday a year in the UK, they’d need a private pot of nearly £60,000, an additional £23,400 compared with April 2022.

These rising figures come as a recent Scottish Widows study shows that a third of Brits could be forced to live in poverty when they retire.

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‘Eye-watering sums’ needed for comfortable retirement

Alice Guy, head of pensions and savings, interactive investor said: “Those with a minimum pension income will need a scary 61% more private pension income compared to last year just to keep up the same living standard and more than £23,000 more in their pension pot.

“These kinds of eye-watering sums are simply unaffordable for pensioners, many of whom have a small private pension pot and little option to make more pension contributions.

“The danger is that withdrawing more from your pension pot could have a long-term impact on your pension wealth – withdrawing too much could mean some pensioners run out of money earlier than planned.

“A minority of pensioners have an inflation-proof final salary pension, but even final salary pensions often have increases capped at 3% or 5%, so pensioners will have to make their money stretch further in times of high inflation.”

The alarming figures from interactive investor are based on a single retiree, and research from Hargreaves Lansdown highlights a similarly bleak picture for unmarried people planning for life after work.

Its study showed half of couples who plan their retirement life together end up with better pension pots, compared to just 41% of single people were likely to save a ‘moderate retirement income.’