UK retirees face a £14,000 annual income gap in pension crisis
Millions of UK retirees face a sharp shortfall in their expected living standards, according to a new warning from PensionBee. The online pension provider highlights a growing gap between the incomes people hope for in retirement and what their savings will actually deliver. With the average pension pot standing at just £88,000, many will struggle to meet even basic financial needs later in life.
A typical pension pot of £88,000, combined with the State Pension, provides an annual income of around £18,000. Yet industry benchmarks suggest a 'moderate' retirement requires nearly £32,000 a year, while a 'comfortable' lifestyle demands almost £44,000. PensionBee warns that frozen tax thresholds and rising numbers of older workers staying employed out of necessity are adding to the pressure.
Uncertainty around life expectancy, inflation, and market fluctuations further complicates planning. Many savers also struggle with complex income choices, low confidence, and the high cost of financial advice—factors that often lead to poor decisions. To address these challenges, PensionBee is calling for clearer information, earlier guidance, and more accessible support. The company also proposes rethinking how retirement income is delivered, including automated and flexible drawdown options. Stronger default choices and stable pension tax policies could further improve outcomes for future retirees.
The findings underline a widening gap between retirement expectations and reality. Without changes to policy and support, millions risk falling well short of an adequate income in later life. PensionBee’s recommendations aim to help savers make better-informed decisions before it’s too late.
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