SIGNIFICANT numbers of people are at risk of a retirement “cliff edge” fall in income when they stop work, a pensions industry body has warned.
Pensions UK made the warning as it published updated “retirement living standards”.
The standards have been developed to help people understand what kind of lifestyle they could be on course for in retirement.
They are calculated by the Centre for Research in Social Policy, Loughborough University, and set out three lifestyle levels in retirement – a minimum lifestyle covering basic needs with some money left over for discretionary spending; a moderate lifestyle with more financial security and flexibility; and a comfortable lifestyle with more financial freedom and some luxuries.
According to the calculations, a minimum retirement lifestyle costs around £13,900 annually for a one-person household and £22,500 for two people.
A moderate lifestyle costs £32,700 for one person and £45,400 for two, while a comfortable lifestyle costs around £45,400 for one person and £62,700 for two.
Pensions UK said it expects around 82% of the working population across the UK to reach at least the minimum standard of living in retirement, falling to just 23% reaching a moderate standard and less than one in 10 (9%) enjoying a comfortable lifestyle.
It said it wants to see more action to help fix the retirement savings gap, with employers where possible offering matching contributions above minimum levels.
Pensions UK also said that housing costs are not included within the retirement living standards, as they vary significantly depending on location and personal circumstances.
Some people will enter retirement owning a home outright and be mortgage-free, while other people may continue to have a mortgage and others may rent.