A new report from Pensions UK has delivered a bracing dose of reality: more than three quarters of workers are not on track to save enough for what the trade body calls a 'moderate' retirement lifestyle. In case you were wondering, a moderate lifestyle apparently costs £32,700 a year for one person and £45,400 for two - and a mere 23% of the working population is on course to hit that mark.
Rising bills have pushed up the cost of retirement, the report notes, adding to calls for action to boost retirement savings. For those aiming lower, a minimum retirement lifestyle costs around £13,900 annually for a single person and £22,500 for two - which includes a week's holiday in the UK, eating out about once a month, and some affordable leisure activities twice a week. Some 82% of workers are expected to reach that floor, so good news if your retirement dreams involve budget bingo.
At the other end of the spectrum, a comfortable retirement lifestyle is estimated to cost £45,400 for one person and £62,700 for a couple. Only 9% of workers are on track to get there, which means the rest of us will be getting very comfortable with the concept of 'moderate'.
The calculations, developed by the Centre for Research in Social Policy at Loughborough University, are intended as a guide for planning retirement savings. But the trade body warns that 'far fewer will go beyond that' - meaning many face a cliff-edge drop in income when they stop work, as Zoe Alexander of Pensions UK put it.
Incomes needed have increased compared with a year ago, driven by rising food and socialising costs - broadly in line with inflation, though housing costs are excluded. Pensions UK suggests that workers, employers, and the government could all step up to encourage more saving. The government, for its part, revived the Turner Pension Commission last year, which found that people drawing their pension 25 years from now will be £800 or 8% worse off per year than today's retirees. Meanwhile, women have about half the pension savings of men, and 28 is the age when the gap starts to widen, according to investment platform AJ Bell.