Pensioners of tomorrow risk a shortfall of more than £68,000 over the course of their retire-ment as one in three (33%) middle-aged Brits expect to survive solely on their state pension, new research from Nationwide Building Society shows.
The shortfall would be enough to enjoy a round-the-world cruise for two, buy a new car, build a conservatory and gift the grandchildren a deposit for their first home. Nationwide, which polled more than 1,000 people aged 40 to 60, commissioned the research to better understand the issues people face when it comes to giving up work. The research shows that just four in ten (40%) people in middle age have a private pension in place. It also highlights that more than half (52%) of people aged 40 to 60 are worried about affording retirement, with four in ten (43%) not believing they will be able to afford the lifestyle they want when they finish work.
Those in their middle age expect their monthly shortfall in retirement to reach an average of £208. This equates to £37,440 when taking into consideration the current retirement age and average life expectancy. However, the reality is that their shortfall could be around twice as high, with those polled already in retirement aged 60 and over saying they receive £505 a month in state pension on average but require £885 a month to live on – £616 for essential bills and £269 discretionary spending. For those without an additional pension to take them beyond the basic state allowance, this leaves a shortfall of £380 a month, or £4,560 a year. This means tomorrow’s pensioners may need to tighten their belts and hunker down in retire-ment – a time they want to be enjoying life and supporting their family. In an average 15-year retirement the shortfall would amount to £68,400, well over twice the average £27,000 annual salary.
The survey shows that those in middle age have an average of £125,350 equity currently in their home but would try and find other ways to survive before tapping into their property wealth. Around a third (32%) see accessing equity in their property as a last resort, while more than a fifth (28%) don’t want to leave any debt to their family. A quarter (24%) wouldn’t know who to approach if they needed advice on their retirement.