Yahoo Finance Two in three retiring this year will run out of money, report warns
Two thirds of those retiring in 2021 have failed to save enough and have a high chance of running out of cash, research has shown.
Hundreds of thousands of workers do not have a pot big enough to fund an annual income of £21,000, even when combined with the state pension, according to a report from Standard Life Aberdeen, a pension provider.
Savers need a nest egg of £390,000 to reliably receive £21,000 per a year, the average amount pensioners expect to spend, for thirty years. However, two in three has saved less than this.
One in three has not even saved £100,000, meaning they could expect an income of £12,300 per year or less, including the £9,339 state pension, Standard Life said. The average pension was £366,000.
More than one million people will reach retirement age in 2021, while many more will choose to leave working life early.
John Tait, of the group, warned that vast numbers who have not saved enough to fund their targets and could end up solely relying on the state pension in later life.
More than a third said they had sped up their retirement date due to the coronavirus pandemic, despite the lack of pension savings.
Soon-to-be retirees based in Yorkshire had the highest expectations for retirement, hoping to take an income of £25,465 on average. However they had a 77pc chance of running out of money, the report found.
The lowest income expectations were in Wales and the North West, where they planned to take £18,284 and £18,765, respectively. But even these regions had a 71pc and 66pc risk of exhausting pension savings.
Unemployment has spiked among older workers. Some 107,000 over-50s were made redundant during the last lockdown. Redundancies have been higher in older workers throughout the pandemic, forcing many into an unafforable early retirement.
Job uncertainty, health worries during the pandemic and lockdowns have been the key triggers for many to leave work, Mr Tait said.
A 66-year-old man has a life expectancy of 85 and women can expect to live to 87, according to the Office for National Statistics. But those nearing retirement should budget to have enough income to last until age 95 to avoid relying solely on the state pension, Mr Tait added.
The state pension does not meet even the most basic of needs, according to the Pensions and Lifetime Savings Association, a trade body. It estimated basic living standards require £10,500 a year allow pensioners to cover basic needs and enjoy the odd social occasion.
Pensioners need at least £20,200 a year in income to lead a moderate life, allowing them to go on holiday in Europe for two weeks a year and eat out a few times a month, the PLSA calculated.
