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

Andrew Prosser, head of investments at InvestEngine, said: “The latest Retirement Living Standards findings highlight a persistent challenge facing millions of people across the UK.

“While it’s encouraging that eight in 10 workers are likely to achieve at least a minimum standard of living in retirement, far fewer are on track for the moderate or comfortable retirement that many aspire to.

“Closing this gap requires people to engage with their pensions earlier, as many do not realise that they are falling short until much later in life.

“Our own research into pension engagement found millennials are often less engaged than both Gen X and Gen Z, despite being the first generation to spend most of their working lives under auto-enrolment.

“Many people also have multiple pension pots from different employers, making it harder to understand whether they’re on track.

“Tracing and potentially consolidating old pensions where appropriate can be an important first step to better understanding the state of your retirement pot.

“For some, a SIPP can provide greater flexibility, more investment choice and a clearer view of overall retirement savings.

“Contribution levels are of course crucial, and the more you can put aside the better, but so too are the costs associated with saving.

“Seemingly small fees on pensions can reduce retirement funds by tens of thousands of pounds over a working lifetime, leaving retirees with less income when they eventually stop work.

“At a time when personal finances are under more pressure than ever, greater action is needed to help people understand the importance of their pension, where it is invested, what they’re paying and whether they’re making the most of available employer contributions.

“Small changes made earlier in life can have a meaningful impact on retirement outcomes decades later.”