Millions of pensioners could hit a financial breaking point much sooner than first thought.
Millions of pensioners could hit a financial breaking point much sooner than first thought (Image: Getty)
The state pension will not sustain the kind of retirement people need, experts have warned. New figures show that the state pension will fall short before the end of 2026, threatening to leave many pensioners dependent on other income to make ends meet.
Pensioners who rely solely on the full state pension are facing a growing income gap, with the annual payment falling £1,427 short of what is needed for a basic standard of living. The payment currently provides £11,973 a year, but Pensions UK has estimated that a single retiree needs around £13,400 annually to meet the minimum retirement living standard. When that shortfall is spread across the year, this means the state pension would effectively run out by November 22.
November 22 has been dubbed ‘State Pension Shortfall Day’ (Image: Getty)
Retirement specialist Just Group has dubbed this date “State Pension Shortfall Day”, according to GB News.
The specialist’s analysis of Office for National Statistics (ONS) data has revealed that more than 1.2 million retired households in the UK are now economically inactive and primarily dependent on state pension income. This includes around 740,000 single pensioners and approximately 500,000 households with two retired adults.
As the ONS defines a household as “mainly reliant” on the state pension when at least three quarters of its total income comes from the state pension or similar pension-related benefits, approximately 740,000 single retirees are currently exposed to the £1,427 annual gap between their state pension income and the minimum level required to cover basic living costs.
Pension UK’s minimum income standard is nearly £1,500 higher per year than the current State Pension, the director at Just Group warns (Image: Getty)
“The data from the ONS highlights the significant number of pensioners who are mainly dependent on the State Pension and other benefits to support them throughout retirement,” David Cooper, director at Just Group, said.
“Pension UK’s minimum income standard is nearly £1,500 higher per year than the current State Pension and demonstrates the gap that hundreds of thousands of retirees need to bridge to achieve a minimum standard of living.
“For many of these people it is not be feasible for them to find employment, leaving them with little choice but to tighten their budgets by nearly £119 a month.”
DWP figures show that nearly one million eligible pensioners are failing to claim Pension Credit (Image: Getty)
However, the problem is being compounded by a massive shortfall in benefit take-up, with DWP figures showing that nearly one million eligible pensioners are failing to claim Pension Credit. This unclaimed support – worth an average of £2,600 to £3,900 a year – could bridge the gap for the UK’s most vulnerable retirees. Experts are now urging households to check their eligibility immediately.
Stephen Lowe, group communications director at Just Group, added: “The state pension has seen significant increases in recent years and provides a solid foundation of income in later-life which, as this research shows, is likely to cover the majority of retirees’ essential spending.
“However, it is clear that people will need to hold a substantial amount in pensions or other savings to top up the state pension in order to achieve the lifestyle in retirement many may want.”
