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Why you could be £380 short each month in retirement

Joanna Faith
Written By:
Joanna Faith

People retiring in the future could find themselves almost £400 out of pocket each month unless they start saving more.

New research shows pensioners need £885 a month on average to live on, which breaks down to £616 for essential bills and £269 for discretionary spending.

However, this is £380 more than the state pension, which pays £505 a month.

With one in three middle-aged Brits expecting to survive solely on their state pension, this could leave them with a shortfall of more than £68,000 over the course of their retirement.

Nationwide Building Society, which carried out the research, said this shortfall could force people to abandon plans for travelling, moving home or supporting children and grandchildren in retirement.

Nationwide polled more than 1,000 40-60-year olds and found just 40% have a private pension. More than half said they were worried about affording retirement and four in ten don’t believe they’ll be able to afford the lifestyle they want when they finish work.

Jason Hurwood, Nationwide’s director of home propositions, said: “We are living longer and need more money to keep us going. The reality is that without adequate income, and potentially living a third of our lives in retirement, older people risk missing out at a time in life when they want to relax and enjoy themselves.”

Hurwood has the following tips for anyone worried by these figures:

  1. Don’t panic – there are lots of options available.
  2. If you are yet to retire it would be beneficial to think about the sort of retirement you want to have. Do you want to go on trips abroad? Would you like to help your children or grandchildren to buy their own home? Knowing what sort of retirement you want to have is a great first step.
  3. Take some time to look at your finances, you may have lots of different pension pots so try to work out how much you have and where this money is saved.
  4. If you are feeling unsure it is important to find someone to talk to, whether that be family and friends, your bank or building society, or a pensions/ financial advice service.