Relying on state pension could leave £68k shortfall

Pensioners expecting to rely solely on their state pension could face a £68,000 shortfall in retirement, research by Nationwide Building Society has shown.

The research published today, 5 March, found that a third of Brits expect to exist on the state pension in retirement, despite the fact they could be £400 out of pocket on a monthly basis.

A poll of those aged 60 and over in retirement found that they need an average of £885 a month in retirement, £380 more that the state pension of £505.

The survey, which questioned 1,000 people aged between 40 and 60 years old, found that those in their middle age expect a monthly shortfall of £208 a month, amounting to £37,440 after calculating current retirement age and life expectancy.

However, the shortfall could be twice as high for those without additional pension provision.

Nationwide director of home propositions, Jason Hurwood, said: “As an industry we really need to do more to help people access their money in later life and it is something we are continuing to explore.

“There needs to be more education and support so that people can take charge of their own futures and pick the option that is right for them and their circumstances. Recalibrating the relationship between our money, our expectations and our assets is key to unlocking a retirement that is comfortable.”

Nationwide found that just 40 per cent of people in their middle age had pension provision in place, with a further 43 per cent believing they will not be able to afford the retirement lifestyle they want.

The Peoples Pension director of policy, Gregg McClymont, said that it is a “stark reminder” that more needs to be done to increase automatic enrolment pension contributions.

“For many people we know that even when contributions increase to 8 per cent this year, it won’t be enough.

"While we can’t escape the fact that household budgets are stretched, once we know the impact of this year’s increase the government must look closely at what the right level needs to be in the future to ensure that today’s workers won’t face pensioner poverty.”

According to the survey, 49 per cent said they are struggling to save due to limited disposable income, while one in five say the cost of living puts them off.

Furthermore, just 9 per cent of people have set retirement goals, while 54 per cent have no idea how much is in their pot, highlighting just how underprepared people facing retirement are.

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