Royal London customers participated in a week-long “State Pension Challenge” where they lived off of the £185.15 state pension in an effort to encourage people to consider their pension plans and how much money they may need to set aside in order to live well in retirement.
According to customers who participated in the challenge, their retirement lifestyle will suffer if they don’t have additional pension provisions.
Nearly 31 per cent of people under retirement age anticipate that it will be their primary source of income; this rises to 39 per cent for those over 55.
The new state pension only provides up to £802, leaving a monthly gap of £315 and is the main source of income for more than half of the people who currently receive it.
According to a Royal London poll of 4,000 people, respondents believe they require an average of £1,117 a month to live comfortably in retirement, which suggests a shortfall in expectations.
Almost 52 per cent of respondents believe they wouldn’t be able to retire comfortably on the state pension alone.
Around 38 per cent of people are anticipated to have a workplace pension as their primary source of retirement income.
Meanwhile, 51 per cent of those over the age of 55 are most likely to rely on the state pension as their primary source of income, compared to only 25 per cent of people between the ages of 18 and 34.
Royal London consumer finance specialist Sarah Pennells says: “What struck me when I was living on the state pension was how tough it was, especially in the middle of a cost of living crisis, and that’s without the energy bill hike due in October.
“While it was possible to pay for everyday items, such as food, there was no money left over for unexpected bills. The state pension is the foundation of most peoples’ income in retirement, but it is highly unlikely to pay enough for the life you’d like in retirement.”
Pennells adds: “Those relying on the state pension as their main or only source of income will undoubtedly find budgeting extremely difficult, with today’s rising costs adding to the pressure.
“It’s important that everyone gets a pension forecast from gov.uk to show how much State Pension you’ll receive when you retire as you may not be entitled to the full amount.
“Planning for retirement may not be a top priority when day-to-day costs are spiralling, but it’s also important to look at how much income any workplace or private pension could generate on top of your State Pension and see if there’s a gap between the life you’d like when you retire and the life that’s affordable.”
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