05 Sep 2024
The average pension pot required for a basic standard of living in retirement has surged to almost £110,000 in just three years, according to research by the Resolution Foundation.
The sum needed has increased by 60% from £68,300 2020/21 to £107,800 in 2023/24. The increase was driven primarily by the cost-of-living crisis which has pushed up the cost of securing an adequate income in retirement significantly.
The Living Wage Foundation commissioned the research to calculate the 'Living Pension' savings rate needed for a worker to be able to meet basic needs in retirement.
The research found that on average a retiree needs an income of £19,300 a year to achieve a basic standard of living.
However, this varies from £13,500 to £28,400 depending on relationship status and housing tenure.
Katherine Chapman, Director of Living Wage Foundation, said: 'The news that workers now require a significantly larger pension pot to cover basic living costs in retirement will undoubtedly be alarming for many, particularly low paid workers who have borne the brunt of rising prices over the past two years.
'These workers are already struggling to make ends meet today, and the prospect of saving for the future feels even more daunting.
'No one should have to choose between getting by today and securing their future. This is why we launched a Living Pension accreditation - helping employers ensure their staff can retire with dignity and without fear of poverty. Together, we can build a future where everyone can look forward to retirement with confidence that they can meet everyday needs.'