State Pension can’t cover the average retiree’s costs our independent financial advisors (IFA’s) and pension advisors can help!

Our independent financial advisors (IFA’s) and pension advisors can help people build up private pension pots so they are less reliant on the state pension.

Retirees now spend an average of more than £12,000 a year, more than double the amount provided by the state pension. According to the 2015 Family Spending Report from the Office for National Statistics, the average retired adult spends £244 a week, amounting to £12,844 a year which requires a pre-tax income of £13,405.

The state pension of £115.95 a week provides pensioners with an income of £6,029 a year, so pensioners must bridge the £7,376 gap between state pension provision and average expenditure themselves. Saga Investment Services calculates that retirees need to spend about £125,000 on an annuity to make up the shortfall.

However, to purchase a guaranteed pension income that rises in line with inflation, a healthy 65-year-old would need to spend approximately £200,000. They would have to spend even more if they intended to withdraw a 25 per cent tax-free lump sum.

Research published by Saga in November 2015 found that 60 per cent of workers fear not having enough income in retirement and say they may have to work beyond 65 because they cannot afford to retire.

“Fewer people are now opting for the guaranteed income paid by an annuity, in favour of more flexible access to their money’, says Gareth Shaw, head of consumer affairs at Saga.

“While this gives people much more freedom over how they spend, there are more complex decisions to make to ensure they can afford the retirement they want and that their money lasts”.

(Money Observer, Jan 2016)