No pension, no planning, almost no time left and facing decades in retirement scraping money together to make ends meet – that’s the fate awaiting an estimated six-and-a-quarter million Britons over the age of 50.
And the problem’s getting bigger. The latest ‘State of Retirement’ report from Liverpool Victoria shows that unless something done this means a five-fold increase on the current 1.2million Britons getting by on the state pension alone, which pays out less than half as much as the minimum wage.
“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,” said Ray Chinn, head of pensions at Liverpool Victoria.
More than one in four over-50s (28%) have no money set aside for their retirement, Britain’s largest friendly society found. The position is worse for women, with more than one woman in three over the age of 50 having no private pension provision compared with one man in five.
That’s a serious worry when the basic state pension pays out just £5,587 a year currently and total pensioner income averages £9,672 a year when additional benefits are added in. Someone working full time on the minimum wage would make £11,477 a year, by contrast.
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Even Government plans to bring in a flat state pension at £140 a week wouldn’t produce an income higher than is deemed the “minimum” you should be paid as a working adult.
And as well as scraping by, there are other large financial risks many haven’t even considered.
Just one person retiring this year in five has made provisions for ill-health in retirement, new research from Prudential shows.
But it’s a potentially crippling cost. The average long-term care bill is £26,000 a year at the moment, figures from the Chartered Insurance Institute show, with the average stay in a care home two years long.
“People retiring this year realise that living longer may mean they will need a higher income as they get older, but few of them have made the connection between the risk of ill-health, and needing money to pay for healthcare,” said Vince Smith-Hughes, retirement expert at Prudential.
“Spending the first few years of retirement trekking in the Andes and running around after grandchildren may be a reality for some, but it is important not to forget that health will worsen as pensioners get older.
“Making financial provision for the possibility of ill-health in retirement should be an integral part of the retirement planning process.”
[Related story: Britons clueless about the cost of long-term care]