Retiree couples need £8k more to survive the year
Figures from the Office for National Statistics show the average two person pensioner household spends around £25,500 a year (£490 per week), but two full state pensions provide £17,092 over the course of a year (£164.35 per person per week).
This means couples with an average expenditure, who are solely reliant on the state pension, will run out of money today and need additional income for the four remaining months of the year.
This has led retirement firm Just Group to mark today ‘State Pension Shortfall day’.
Households will have to plug a financial gap of £8,367 – nearly another full state pension – to make ends meet until December.
Stephen Lowe, group communications director at Just Group, said the figures are a good benchmark for those thinking about how they will fund their retirement.
“The state pension is the bedrock of many people’s income once they retire and will cover the absolute basics. But this analysis shows it will only cover two thirds of the typical annual expenditure of retired households – leaving people to find the other third themselves.
“We’re all familiar with the advice to start saving for a pension at an early age, but what if your age puts you nearer retirement than university? The good news is you do have some options.”
With seven in 10 people accessing their pensions before the age of 65, this could significantly reduce the amount of income people receive in later life.
Retirees should contact Pension Wise or The Pension Advisory Service to get some free, independent and impartial guidance to help make a plan.
Lowe added: “Taking guidance will help people get a good idea of how much they are likely to need in retirement, then they can manage their existing savings, and perhaps plan to save more, so they can avoid financial difficulty when they no longer have a salary.
“None of us wants to be poor in retirement but pension planning isn’t front of mind for most people. ‘State pension shortfall day’ should provide a good nudge to encourage people to look ahead and start planning for retirement.”
Are you missing out on other state benefits?
Retired homeowners could be missing out on other benefits they’re entitled to, according to Just.
It said four in 10 pensioner homeowners eligible for state support are failing to claim any benefits while a further two in 10 not receiving their full entitlement. This can add up to a few hundred and in some cases a few thousand pounds a year that would make a big difference to people’s lives.
Lowe said: “The message is clear – retired homeowners should take steps to find out what help they can claim. The government website direct.gov.uk is a mine of information, while Citizens Advice or other charities may also be able to help.”
Related: See YourMoney.com’s Pensioner households miss out on £1,000 of state benefits for more information.