Money Minder, a financial planning company, calls it the ‘Age of Ruin’. It looked at British retirees’ average pension pots and how long the funds would last if they tried to maintain a moderate lifestyle. 

The calculation was based on a pension drawdown calculator, factoring in the State Pension and what the Office of National Statistics says is the average pension pot fund of £190,000 for people age 65 to 74.

The state pension is probably not enough to cover all costs, so many people rely on a private pension and could gain in the long run by topping it up. 

Women tend to live longer

But even that may not be enough if you love to travel extensively or face unexpected health care costs.  (Life expectancy for someone who is now 65 is another 18.5 years for men and 21 years for women.) 

 The Pensions and Lifetime Savings Association figures that a single pensioner requires £23,300 a year of income to maintain a moderate living standard. Less than half (£10,600) would come from a full State Pension.

According to Money Minder, someone with £190,000 in retirement savings would probably withdraw 25% tax-free cash at the start, leaving them with £142,500. (Taxes are also a factor: someone with a gross taxable income of £14,846 would pay 20% on anything over the current personal allowance of £12,570.)

A moderate lifestyle

So in order to have an income of £12,700 per year, a retiree would need a pot of £367,848 to live their life on a ‘moderate’ basis. (Of course, if you are paying London-level rents, you’d need a much higher income.)

But if you only have £190,000 and you take 25% out tax-free and assuming you pay for a big holiday or a car, your residual fund of £142,500, drawing out at £14,846 per year gross, would run out before you reached 79.

Some funds might grow, but Money Minder said that even if yours expanded by a healthy 8% per year, the cash would run out by the time you reached 83.

Ray Black, managing director of Money Minder, said: “While everyone will have access to the State Pension, you can’t rest on the blind assurance that you’ll have enough money with that to be able to maintain the same standard of living as you do while working.”

Experts recommend you review your pension plan regularly, and also try to unlock any additional Government help.