SINGLE Brits will need a pension pot of £123,000 just for basics when they retire – and as much as £305,000 to be able to take holidays, new research shows.
This is on top of the state pension – typically around £155 a week – that retirees get from the age of 66, the report from Which? says.
To have enough for “essentials” – food and drink, mortgage or rent, bus fares or petrol, energy and phone bills plus clothes – OAPs need £13,000 a year.
To buy an annuity – a pension payment until they die – to top up their state pension to that amount they would need £123,000 in savings.
For a “comfortable” life – holidays to Europe, plus visits to pubs and restaurants, Sky TV plus days out – it would be £305,000 to have the £19,000 a year needed.
Couples, who both get a state pension and can share key costs like housing, need less in private savings – but still big amounts.
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To have enough for essentials, a couple needs £47,000 saved up between them for an income of £18,00 a year.
To be comfortable, it jumps to £265,000 for the £26,000 a year Which? calculated.
For a “luxury” retirement – long-haul holidays, fancy meals and a new car every five years – the figures are eye-watering.
Single pensioners would need a pot of £671,000 and couples £757,000 to buy an annuity to top up state pensions.
As well as buying an annuity, retiring Brits can also do an income drawdown.
In this case, pensioners take money out as a monthly or yearly income – but keep the rest invested, usually in the stock market or bonds, so it can carry on growing in value.
Which? calculates Brits will need slightly lower amounts for this method – since the pot can keep growing in value so long as the stock market doesn’t crash.
Jenny Ross, Which? money editor, said: “Most people will need to be putting away significant sums if they want to ensure they can enjoy a comfortable retirement – but many do not have access to the information they need to help them plan.
“The government must move swiftly to introduce the pensions dashboard and simplify annual benefits statements.
“This will enable people to understand how much they’ve saved, what this could be worth in retirement and, crucially, extend its proposals to include how much savers have paid in charges.”
Which? is calling on the government to press ahead with reforms to help provide savers with better information about their pension savings.
Key to this is so-called pension dashboards. These give savers access to all their pensions information – from pots with different employers plus their state pension – in one place.
Which? also thinks the Department for Work and Pensions (DWP) should move forward with plans to shorten and simplify annual benefits statements – which can run to 20-plus pages at the moment.
As part of this, they want clear information about costs and charges in one simple, personalised figure.
To come up with the report, Which? surveyed nearly 7,000 retirees in February about their spending to develop retirement income targets for one-person and two-person households.
The findings can be used as a guide to how much people are likely to spend and how much they might need to save, factoring in the state pension and tax bills.
The current retirement age is 66, but this rises to 67 between 2026 and 2028 and then to 68 between 2037 and 2039.
Previously men retired at 65 and women at 60. Which?’s calculations are for those yet to retire.
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Savers are facing a four-year wait for much anticipated new technology that will let them view all their pension pots in one place online.
Around 1.6 million savers have lots their pension pots, according to the Association of British Insurers.
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