A new report has revealed that a total of 6.25 million people aged over 50 are expected to rely solely on a state pension within a few years.
Given the current financial climate many people don’t have a lot of savings compared to years ago when it was easier to save for the future.
According to the State Retirement Report from LV= once people retire they could be living on less than minimum wage. An average state pension is currently £9,672 a year when you take into account additional and annual income. This is lower compared to the national minimum wage which is £11,477 for a full time worker. As it stands now 1.2 million people live on state pension but this is expected to increase dramatically over the next few years.
More people are becoming concerned about their financial position and whether they will be secure for the future. The report shows that 58% of people who are set to retire in the next five years have increased worries during the last 12 months about their financial situation. They were also concerned about how little savings they have. Another finding was that 76% of people worry about the rising cost of food and utilities and 61% worry about the effects of low interest rates impacting their savings.
However, over 50’s who are thinking of retiring feel that the Government can do more to help with pensions and savings. 48% feel improvements can be made to tax breaks, 47% think pensions could be simplified and 61% feel interest rates could be raised to help savers.
Ray Chinn, LV= Head of Pensions, commented on the report: “It is worrying that so many people are saving little or nothing for their retirement "wages", instead expecting to fall back on the state pension.
“While working hard up to their retirement to bring home a decent wage, I'm sure many will be disappointed to retire with an income equivalent of less than the minimum wage.
“If more people reflected on their pension as a "wage" that they will potentially be relying on for over two decades, they might feel more inclined to plan ahead.”
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By Amanda Bainbridge