Retirement ‘cliff edge’ warning as figures indicate income levels needed

Maike Currie, vice president of personal finance at PensionBee, said: “The cost of retirement has risen by around three-to-four per cent across all Retirement Living Standards, broadly in line with the inflationary backdrop, reinforcing the challenge facing savers.

“While the increases may appear modest, the bigger headline issue is that too many people are still not saving enough to achieve the retirement lifestyle they expect.

“These figures are a wake-up call. Automatic enrolment has been hugely successful in getting people saving, but participation and adequacy are not the same thing. The current minimum contribution rates were never intended to be the end goal.

“We also need to bring more people into the system that are presently excluded, such as the self-employed, carers, lower earners and those juggling multiple jobs. Retirement adequacy is not just a savings challenge, it’s an inclusion challenge too.

“People can’t save money they don’t have, which is why this cannot be left solely to individual behaviour. Only nine per cent of people are on track for a comfortable retirement, and nearly four in five will fall short of even a moderate standard of living. This represents a systemic problem that has been building for years.

“More concerning, the standards do not include housing costs, and so very likely underestimate the true reality. For the millions of people who will still be renting in retirement, or have mortgage debt later in life, the real shortfall is likely to be considerably larger than these figures suggest.”