Pensioners are now likely to run out of money seven years before they reach the average life expectancy age, new research has revealed.
The research, using Money Minder’s pension drawdown calculator, revealed a shortfall of seven years – with the average single retiree needing a pension pot of at least £367,848 to maintain a moderate standard of living.
And yet, the average personal pension fund for those aged between 65 and 74 is almost half of this at £190,000, according to the ONS.
Research from the Pensions and Lifetime Savings Association revealed that a single pensioner needs £23,300 a year of income for a moderate living standard.
After the State Pension is taken into account, this leaves pensioners needing to supplement their income with £12,700 a year. The average pensioner could use this up by the time they turn 78 – despite the fact that the average life expectancy for those over the age of 65 in the UK is 85.
The picture differs across the UK, where life expectancy varies, and the prospect of a long and comfortable retirement remains a priority.
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Ray Black, managing director of Money Minder, said: “This report highlights the sobering reality of life without adequate pension savings, and with life expectancy fluctuating across the UK, some pensioners actually run the risk of running out of money years before they hit the life expectancy age. While everyone will have access to the State Pension, you can’t rest on the blind assurance that you’ll have enough money with that to be able to maintain the same standard of living as you do while working.
“It’s important to regularly review your pensions and investments, not only so you can purchase home improvements, cars and holidays after retirement, not only for the benefit of ourselves but also for the well-being and security of our families and loved ones.
“A pension drawdown option can let you access your pension funds while still keeping them invested – potentially with the scope to earn more over time. For people who are happy with keeping their pension fund fully invested, it has the potential to substantially grow in real money terms.”