New research confirms many people are experiencing the growing gap between what the State pension provides and a comfortable retirement.
In April 2022, all state pensions will increase by 3.1%. The new state pension will reach about £185 a week, approximately 5% less than if the triple lock basis for increases remained in place for 2022.
The new state pension rates came out shortly after an updated report was published looking at retirement living standards. The report calculated the cost of three different baskets of goods and services that equate to three retirement living standards:
- minimum, where income covers all needs, with ‘some left over for fun’;
- moderate, providing more financial security and flexibility; and
- comfortable, offering greater financial freedom and ‘some luxuries’.
The research put annual after-tax costs to each living standard for couples and singles, with an adjustment for higher London expenses:
Source: Pensions and Lifetime Savings Association
Adjust for tax and, for example, a couple living in the Midlands who want a comfortable standard of living would each need pension income of about £28,000.
The new state pension from April 2022 will be £9,628 a year, leaving a significant gap if your goal is anything other than a minimum retirement living standard (no car, no European holiday).
Bridging the gap between the retirement living standard you want and what the state will provide requires private retirement provision. Determining how much the gap-filling will cost and what form it takes begins with a detailed review of your current retirement plans. The sooner you contact us to start that process, the longer the period over which you can spread the investment required.
The value of your investment and any income from it can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.
Investing in shares should be regarded as a long-term investment and should fit with your overall attitude to risk and financial circumstances.
Occupational pension schemes are regulated by The Pensions Regulator.
The value of tax reliefs depends on your individual circumstances. The Financial Conduct Authority does not regulate tax advice, and tax laws can change.
Production
