Pension warning: britons facing ‘lower standard’ of retirement living

As people live longer and longer, the amount of money they need in retirement may also increase. Life expectancy is set to surge into the 90s for people born in around 20 years’ time, new

data from the Office for National Statistics suggests. Life expectancy at birth is projected to increase by 2.8 years for boys, from 87.3 to 90.1, and 2.4 years for girls, from 90.2 to 92.6,

by 2045. Around one in seven boys and one in five girls born in 2020 are expected to live to 100. By 2045, the chances of living to 100 are expected to rise to one in five for boys and one

in four for girls. With this in mind, people may need larger pension pots in the future to sustain their retirement. READ MORE: FREE PRESCRIPTIONS ‘AXED FROM APRIL’ BUT 15 GROUPS CAN ALREADY

GET THEM WITHOUT CHARGE “The fact we are all living longer should of course be celebrated. However, it also has profound implications for both public policy and people’s own finances –

particularly retirement planning. “Rising life expectancy will mean increasing numbers of people face a stark choice: save more, retire later or spend less money - and have a lower standard

of living - in retirement.” The state pension provides up to £9,339.20 per year at present, but Mr Selby warned people not to expect the state pension to be enough for them to live on. He

said: “Although there will always be a temptation to put off retirement saving, those who do so risk having to rely on the state pension. Exploring the example of a single person hoping to

enjoy a "moderate" standard of living in retirement, Mr Selby mapped out a road to achieving that goal. Based on the PLSA Living Standards, this might require a post-tax income of

£20,800, which would imply a pre-tax income of £22,860, based on 2021/22 tax rates. He said: “If we assume the first £9,339 of income is provided by the state pension, that means his private

pension might need to deliver the remaining £13,521. “If they have already taken their 25 percent tax-free cash, they might need a fund worth around £315,000 to provide that income, rising

each year by two percent, for 30 years. “If they needed to sustain a similar standard of living for 35 years, they might need a fund worth around £350,000.”