If you were born before 1976, it’s time to check how things are looking (Image: MementoJpeg via Getty Images)
Those in their 50s have been urged to carry out a vital financial check without delay.
Financial advisers and money experts have responded to Pension UK’s updated Retirement Living Standards (RLS) report, which reveals that fewer than a quarter of people are expected to enjoy a moderate standard of living in retirement. They warn that, for anyone in their 50s who has yet to save sufficiently for retirement, “now is the time to confront the numbers”. Nevertheless, they stress that “it’s not too late” provided people act promptly and establish a solid plan.
One financial adviser, however, described the latest figures as “an uncomfortable wake-up call”. The annual standards, calculated by the Centre for Research in Social Policy, Loughborough University, now show that a minimum retirement lifestyle costs £13,900 a year for a one-person household and £22,500 for two people.
A moderate lifestyle costs £32,700 for one person and £45,400 for two, while a comfortable lifestyle costs £45,400 and £62,700 respectively. These figures reflect rising everyday costs across a range of spending categories, including food, essential household bills and transport, as well as leisure pursuits and hobbies.
Pensions UK anticipates that approximately 82% of the working population will achieve the minimum standard of living in retirement. However, this drops sharply to just 23% reaching a moderate standard and a mere 9% attaining a comfortable one. The organisation warns that these findings are at odds with the expectations many people hold for their retirement years — and that, without greater levels of saving, countless individuals risk facing a substantial reduction in income when they cease working.
Zoe Alexander, executive director of policy and advocacy at Pensions UK, said: “The latest update to the Retirement Living Standards underlines a clear reality for many people, today’s saving levels will not be enough for the retirement they expect. It is expected that around 82% of people reaching a minimum standard of living, but far fewer will go beyond that.
“That is out of step with what people expect for their future. Without action, too many risk facing a cliff-edge drop in income when they stop work. The Government is right to be considering whether minimum contributions need to rise through the work of the Pensions Commission.
Nouran Moustafa (Image: Nouran Moustafa/Newspage)
“In the meantime, tools like the RLS play a crucial role by helping people take control and understand what they might need, so they can put more money away where and when they can. We also encourage people to speak to their employer and see whether the organisation is prepared to support them to save above the minimum, such as higher rates of matching pension contributions. This could help ‘bridge the gap’ until policy catches up and we see higher savings levels set in legislation.”
While younger individuals have ample opportunity to close the gap and secure a moderate living standard during retirement, financial experts have offered their guidance for those in their 50s who are running out of time.
Gosia Dawson, director at Glade Financial, cut straight to the chase: “If you’re in your 50s, now is the time to confront the numbers. Understand what income your pensions could realistically provide, identify any shortfall and take action while you still have earning power on your side.”
Philly Ponniah, chartered wealth manager and financial coach at Philly Financial, said that, “for people in their 50s, the good news is that it’s not too late”.
She continued: “The worst thing you can do is assume you’ve missed your chance. Start by getting clarity on what pensions you already have, what income they might provide and what gap needs filling.
“Even small increases in pension contributions can make a meaningful difference over the final 10 to 15 years of working life, particularly when combined with employer contributions and tax relief. The key is taking action now rather than hoping things will somehow work out.”
People in their 50s should check, according to experts (Image: Pexels)
Anita Wright, chartered financial planner at Ribble Wealth Management, said: “In your 50s, time is shorter, not gone. Strip out the costs you won’t miss and redirect that money. Clear expensive debt before it compounds against you.”
Wright also cautioned against placing too much faith in the state pension: “A lot of people still treat the state pension as a backstop that will be there in full. But a shrinking workforce is being asked to support a growing number of retirees and the maths gets harder every year.
“The triple lock looks generous today, but it’s a political choice, and political choices change. Plan as if the state pension is a bonus, not the foundation.”
This sentiment is echoed by Nouran Moustafa, practice principal and IFA at Roxton Wealth: “If you are in your 50s, it is not too late, but it is too late to guess. You need to know your pension value, state pension forecast, mortgage position, expected spending and whether you can increase contributions, delay retirement, reduce debt or use other assets more strategically.
“The state pension is important, but it was never designed to fund a comfortable retirement on its own. Relying on it completely is risky, especially when housing costs, care costs and inflation can change the picture quickly.”
Echoing Ponniah, Eamonn Prendergast, chartered financial adviser at Bromley-based Palantir Financial Planning, said that, for anyone in their 50s, “it’s not too late, but you need a plan”.
He added: “A simple cashflow forecast can show where you stand and there are only three levers: earn more, save and invest more, or spend less. The State Pension provides a foundation, not a solution, especially for those without housing security. The earlier people engage and take advice or guidance, the better their chances of closing the gap.”
Meanwhile, Graham Nicoll, financial planner at NCL Wealth Partners, urged people not to panic, but to act.
He continued: “Maximise your workplace pension contributions to capture employer matching, utilise carry forward tax allowances, and review any cash, ISAs, pensions and investments to ensure they are working towards your desired lifestyle in retirement. People still mistakenly think the state will provide enough. It will not. It is an inflation-squeezed safety net, not a funding plan for a comfortable lifestyle.”
Antonia Medlicott, founder and MD at London-based Investing Insiders, agreed: “If you’re in your 50s, the good news is that you still have time to act. Increasing pension contributions, delaying retirement by a few years, consolidating old pension pots and making full use of employer matching can all make a meaningful difference.
“The biggest mistake is assuming it’s too late. Your 50s are often your highest-earning years and one of the most important decades for retirement planning.”
Meanwhile, Rob Mansfield, Independent Financial Advisor at Tonbridge-based Rootes Wealth Management, offered a more sobering assessment: “This report is an uncomfortable wake-up call. The dilemma is tough because the cost of living is relentless.”