A recent study by retirement specialist Just Group has unveiled that over 1.2 million individuals, including around 740,000 single retirees and 500,000 two-adult households, primarily rely on the state pension for their retirement income. These households receive at least three quarters of their total income from the state pension or similar pension-related state benefits, according to data from the Office for National Statistics (ONS).
The current state pension falls short of the recommended amount for a comfortable retirement. To achieve a “minimum” standard of living, single pensioners would need an annual income of approximately £13,400, which is significantly higher than the full new state pension of £230.25 per week. This leaves a shortfall of £1,427 per year.
David Cooper, director at Just Group, emphasized the necessity for many retirees to bridge the gap between their current state pension and the minimum income standard. Cooper highlighted that exploring entitlement to additional benefits could help improve retirement living standards for many individuals. He suggested that accessing unclaimed support might offer significant financial relief for retirees facing budget constraints.
The state pension undergoes annual adjustments in accordance with the triple lock mechanism, ensuring increases based on the highest of earnings growth, inflation, or a minimum of 2.5%. In the upcoming year, the state pension is set to rise by 4.8%, with the full new state pension increasing to £241.30 per week.
Individuals newly retiring are eligible for the new state pension, requiring a minimum of 35 years of National Insurance contributions to receive the full amount. It is essential for retirees to stay informed about their entitlements and explore opportunities to enhance their financial well-being during retirement.