Single person households are four times more likely to fall below the minimum income standard, according to the PPI report. More than one in three people have meanwhile retired with unpaid debts, averaging £17,500, according to a survey by Key Retirement Solutions, an equity release firm.
Just one in three people can expect a “moderate” life in retirement, which is equivalent to £20,200 a year in income, according to the Pensions and Lifetime Savings Association, a trade body. This income would allow them to cover all the basics and to go on holiday in Europe for two weeks a year, as well as eat out a few times a month.
Double the minimum pension contributions
Future generations are equally at risk of falling short of an “adequate” income in retirement, as the minimum contributions made through auto-enrolment are insufficient. The PPI and Centre for Ageing Better urged the Government to double the current minimum contribution to 16pc of wages to ensure workers were saving enough.
The Government’s auto-enrolment policy, first introduced in 2012, has been successful in getting more people to save as it means that all workers have been automatically enrolled in company schemes unless they opted out.
Daniela Silcock, of the PPI, said the “stark” figures showed how urgently those saving today needed an accessible and achievable target. There had been no single standard of what an “adequate” income in retirement was and how much pension wealth that required, she said.
“Action from the Government to pursue this agenda will be necessary soon, to help prevent future generations of older people experiencing poor retirement living standards,” Ms Silcock said.
Anna Dixon, of the Centre for Ageing Better, said action was needed to ensure millions of people approaching retirement and generations to follow did not find themselves without adequate income in later life.
An “adequate” retirement has been defined as the ability to maintain living standards in a household from working life through to retirement.
