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The average pension needed to meet basic needs in retirement surged by 60 per cent in the cost-of-living crisis, rising from £70,000 in 2021-22 to nearly £110,000 in 2023-24, research from Resolution Foundation, commissioned by the Living Wage Foundation, has found.
The research found that on average a worker needs an income of £19,300 a year in retirement to achieve a basic standard of living, although this varied from £13,500 to £28,400 depending on relationship status and housing tenure.
In particular, the research revealed that single home-owning pensioners would need £258 a week (or £13,500 annually) and pensioner couples that own their own home would need £395 a week (or £20,600 annually).
However, those who don’t own their own home will need a "substantially" higher income, as single pensioners who live in the private rented sector would need an additional £6,900 a year (£20,400) compared to a homeowner to achieve an acceptable standard of living.
When averaged out across different relationship statuses, housing tenures, genders and average life expectancy, the researchers found that the average pension pot size needed in addition to a full state pension to achieve an annual income of £19,300 in retirement is £107,800 for 2023-24.
The research also highlighted growing concerns over savers' ability to retire, revealing that more than half (53 per cent) of UK adults saving into a pension think they will never be able to retire, while 62 per cent think they will have to work several years beyond retirement age.
Despite falling inflation, the Living Wage Foundation found that these figures are largely unchanged since 2023.
These concerns were also heightened for low-paid workers, women, and those living in rented accommodation, who had more negative feelings toward their retirement savings.
Indeed, the research found that nearly two thirds (65 per cent) of workers paid below real living wage felt they would never be able to retire, compared to 54 per cent of those paid the real living wage and 47 per cent earning above it.
In addition to this, 58 per cent of women said they would never be able to retire compared to 47 per cent of men, while 59 per cent tenants think they will never be able to retire compared to 48 per cent of homeowners.
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