The UK's adverse macroeconomic environment has led to a huge cohort of savers having to face up to the prospect of a substantial drop in their retirement income, research from Wealth Wizards has suggested.

New figures from Wealth Wizards showed that 1 in 3 individuals previously on track for a "moderate" retirement lifestyle — as determined by the Pensions and Lifetime Savings Association (PLSA) — are now facing a "minimum" standard instead.

Wealth Wizards said that rising inflation and the Bank of England's efforts to stave it off have had a knock-on effect to the purchasing power required for retirees to achieve their desired retirement living standards.

Analysis of anonymised data gathered over the past two years of over 40,000 users of the Wealth Wizards Pension Guidance Software as a Service (SaaS) Platform, also revealed that nearly 1 in 5 pension holders are not on track for the retirement living standard they would like and 1 in 10 savers previously on track for a "minimum" living standard are currently below that threshold.

The latest figures from the PLSA showed the cost of a minimum standard of retirement has risen by 18 per cent since 2021, meaning that the amount a single person now needs to have to achieve this level is £12,800 a year.

A "moderate" standard would see a retiree have £23,000 to spend annually (a 12 per cent rise) and a "comfortable" retirement would require £37,000 (an 11 per cent rise).

According to the data from Wealth Wizards, 15 per cent of people are on course to achieve a "comfortable" retirement, 28 per cent are set to have a "moderate" savings pot, and 45 per cent will have to make do with a "minimum" amount or spending power once they stop working.

Meanwhile, 12 per cent will be below the "minimum" level as figures stand currently.

"Our insight demonstrates millions of people are facing a real risk of sleepwalking into a retirement that doesn’t meet their desired lifestyle," said Wealth Wizards CEO Ben Hampton.

He explained that while some people have access to a financial adviser to help address the issue, there are millions of others who do not because of either the costs associated with advice, or a perception that their circumstances do not warrant it accessing advice.

"These are exactly the people who would benefit from increased access to advice and more personalised guidance and, rightly, the regulatory focus on helping customers at this key life stage is intensifying," added Hampton.

“The thematic review of retirement income advice is only adding further interest to how customers are supported, and the long-awaited review of the advice/guidance boundary is expected to bring new innovative guidance and advice models.

"However, the immediate impact of the current economic climate is evident and time is of the essence.

"As an industry, we must find ways to move forward in offering solutions now for those who don’t have time to wait.”

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