A third pensioners of tomorrow looking forward to financially comfortable golden years are in for a shock as their income falls £68,000 short of what they need just to pay the bills.
One in three are relying on the state pension to fund their retirement, but new research reveals they will need £885 and must find £380 a month more than the £505 the state pays.
That leaves a £68,000 shortfall over their retirement.
Many are now worried they cannot afford to retire and maintain the lifestyles that they want.
And, says the study from the Nationwide Building Society, only one in 10 have a clear retirement plan or know the value of their pension pots.
Expectations and reality
The society days this miscalculation between expectations and reality is a set back for millions who will have to give up plans to travel, spend on hobbies or fund education and homes for their families.
To give some idea of how much the missing £68,000 would fund, the Nationwide has calculated the money would pay for a round-the-world cruise for two, a new car, a conservatory and gifting grandchildren a deposit for their first home.
The research also disclosed that only four in ten (40%) of the middle-aged have a private pension, while more than half (52%) aged between 40 and 60 are worried about what they can afford in retirement, with four in ten (43%) feeling they can’t 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. 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.
“Options should be varied; we can’t presume releasing equity in the home is the solution for all older people with limited income, despite healthy average levels of equity. 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.”