Retirees report £119,000 less in pension savings than they’d hoped for, reveals research from Standard Life

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• Retirees hoped to have a pension pot of £250k – but on average have £131k in retirement savings potentially reducing monthly income in retirement by £480
• Half of retirees express regrets about their financial preparation: 53% wished they’d started saving earlier, 42% regret not accessing advice or guidance

New research from Standard Life, part of Phoenix Group, reveals that UK adults face a significant shortfall in the amount of pension savings they have at retirement compared to what they wanted to retire on, potentially impacting their retirement lifestyle as a result.

Standard Life’s Retirement Voice Report found that, on average, retirees had hoped to build up a pension pot of £250,000¹. However, the average amount that they accumulated by retirement was £131,000 – leaving a £119,000 shortfall.

Based on current annuity rates, a pot of £250,000 could lead to an income of £1,007 monthly, or £12,091 a year, assuming a retirement age of 66. A pot of £131,000 could result in a monthly income of £527 in retirement, or £6,332 yearly - £480 month, or £5,759 a year less.². However, the not insignificant £250,000 pot falls short of a ‘moderate’ standard of living in retirement according to the PLSA, including the State Pension.

Retiree regrets

Retirees also expressed several regrets in relation to their financial preparation for retirement. Half (50%) wished that they’d thought about their retirement finances at a younger age when they had more time to make changes, 54% wished they saved more, and 53% wished they started saving earlier. Other regrets include

• 51% wished they had more information about how to plan and prepare for my retirement
• 42% said they should have sought advice or guidance to plan for their retirement
• 37% said they should have sought advice or guidance before they accessed their pension savings

Dean Butler, Managing Director for Retail Direct at Standard Life said: “It can be hard to work out how much you need to save to achieve your desired standard of living in retirement, particularly earlier on in your career. It’s even harder to stick to it, as everyday expenses and those one-off costs that come up in life constantly threaten to move long-term saving down the priority list. Clearly there’s a big gap between what people hope to save, and what they actually do – this is unsurprising, particularly when looking at it during a cost-of-living crisis, however the result can be a significantly reduced standard of living in retirement.

“Access to affordable personalised advice and guidance is crucial to closing the gap – as things stand, way too few people feel able to get advice and we can see that people then regret not doing so. Ultimately, contributing as much as possible, as early as possible is the key to a good retirement outcome, but it’s a huge challenge to know what to aim for and when to prioritise long-term saving over more immediate priorities.”

Standard Life offers tips to maximise pensions savings:

1. Make sure you’re taking advantage of all the benefits of your pension plan and your employer offers. If your employer offers a matching scheme, where if you pay additional contributions your employer will match them, consider paying in the maximum amount your employer will match to get the most out of it.
2. Getting a bonus this year? Deciding to pay some or all of your bonus into your pension plan could save you paying some big tax and national insurance deductions. Meaning you could keep more of it in the long run, and it could be a great way to give your pension savings a boost.
3. Even a small amount could make a big difference in the long term, especially if you’re starting young. If you’re able to, think about paying a little more into your pension when you get a pay rise or have a little extra savings.

ENDS

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Notes to editors:

¹ Boxclever conducted research among 6,350 UK adults. Fieldwork was conducted 26th July – 9th August 2023. Data was weighted post-fieldwork to ensure the data remained nationally representative on key demographics.

² Calculated using Money Helper’s annuity comparison tool on 9th April 2024. Assumes income starting at the age of 66, single income, no protection, payments to increase by RPI and no existing medical conditions.

About Standard Life 

• Standard Life is a brand that has been trusted to look after peoples’ life savings for nearly 200 years 
• Today it proudly serves millions of customers who come to Standard Life directly, through advisers and through their employers’ pension scheme.
• Standard Life is part of the Phoenix Group, the largest long-term savings and retirement business in the UK. We’re proud to be building on nearly 200 years of Standard Life heritage together
• Our products include a variety of Pensions, Bonds and Retirement options to suit people’s needs, helping our customers to invest and save for their future. We’re proud to offer a leading range of sustainable and responsible investment options.
• We support our customers on their journey to and through retirement with comprehensive, easy-to-understand guidance so they can invest in the right way for their needs, and plan a future they feel confident about.
• The value of investments can go down as well as up, and may be worth less than originally invested.