Future state pensioners face being almost £70,000 worse off after state pension age changes, according to financial experts.
Someone aged 25 today will miss out on two full years of state pension payments which could be worth £69,900 by the time they finally hit a new, higher state pension age of 68, according to analysis by wealth management firm Rathbones.
Rathbones estimates that for someone aged 25 today, this could mean missing out on up to two full years of state pension payments, worth around £69,900, while a 45‑year‑old could miss out on approximately £42,700, compared with the state pension age remaining at 66.
The analysis is based on the new full state pension of £12,548 a year, uprated by 2.5% annually under the triple lock, which increases payments by the highest of inflation, average earnings growth or 2.5%.
Ed Wood, Financial Planning Director at Rathbones, says: “The elephant in the room for younger generations is that they are likely to face a less generous state pension system than many retirees enjoy today, pushing the bar much higher for what they need to save themselves. Many young adults we’ve come across ask for retirement modelling for worst case scenario of no state pension.
“With people living longer and public finances under strain, serious questions are being asked about the long‑term affordability of the triple lock – with the Institute for Fiscal Studies warning it could cost up to £40 billion a year by 2050. That means the onus is increasingly falling on individuals to build a robust retirement pot themselves.”
Rathbones estimates that a single person retiring today at age 65 may need around £796,000 in savings to fund a comfortable retirement, rising to £913,000 for a couple, assuming the state pension is paid throughout retirement.
Rebecca Williams, a Financial Planning Lead at Rathbones, says: “People often ask us if there’s a single ‘right’ number to aim for when saving for retirement. There isn’t, but age matters enormously. Inflation quietly erodes even large sums over time, and for younger generations that challenge is compounded by high housing costs, student debt and the cost of living – making it harder to save early, when every pound has the greatest impact.
“Starting early, saving consistently and making the most of workplace pensions and employer contributions can make a powerful difference over time.”