A new report has put a figure of £115,000 as the deficit those who rely solely on pension contributions will face once they retire.
The Retirement Shortfall Report, produced by pension advisers Almond Financial, analysed regional salary and life expectancy data from the Office for National Statistics of the top 30 most populated cities and towns in the UK.
This was compared with total pension contributions and retirement living standards to calculate the shortfall workers will face in retirement if depending solely on pension income.
The top 30 most populous towns and cities in the UK were then ranked from the the largest real-term shortfall to the smallest.
The average recommended annual retirement income for a single person wanting to enjoy a moderate standard of living in London is £28,300, or £23,300 outside the capital.
Overall, the average worker will have a shortfall of £115,768 should they base their retirement income entirely on pension pots, causing many to think twice about how much they need to save.
At a regional level, those living in London faced the biggest shortfall to achieve a financially secure retirement. The deficit here was £177,847 in retirement income should they choose to rely solely on pension contributions.
Plymouth ranked second highest, with a gap of £136,099 to make up. Luton and Nottingham followed – £129,243 and £128,202 respectively.
Those with the smallest deficit were in Scotland and Northern Ireland, with workers in Glasgow, Edinburgh, Aberdeen and Belfast all facing a deficit of less than £100,000.
Almond Financial principal adviser Sam Robinson said: “The report’s findings will certainly be an eye-opener to some that while we work all our lives for a pension, it still may not be enough for us to live the retirement we want.”
Lifestyle requirements for retirement will vary greatly from person to person, and ultimately it is down to individuals to determine how much cash they want to reserve, he said.
“But this report shows that more needs to be done to achieve a financially secure retirement, and for those who do want to top up their retirement income there are a number of ways to do this,” Robinson added.
Sleepwalking into retirement
This mismatch between expectations and achieved income in retirement was highlighted by the Great Retirement Study from The Wisdom Council, published on April 4. This showed a variance of 14 per cent between pre-retirement expenditure (92 per cent) and income (78 per cent).
It highlighted that a great many individuals have unrealistic expectations of their retirement income, yet they are reluctant to take advice to make improvements until it is almost too late.
The study showed that only one in four of those surveyed had taken advice between the ages of 60 and 64 and this was largely for a specific task, rather than ongoing advice.
