A recent study conducted by retirement specialist Just Group has unveiled the significant number of households heavily reliant on the state pension for their retirement income. According to analysis of Office for National Statistics (ONS) data, over 1.2 million individuals, including 740,000 single retirees and 500,000 retired two-adult households, primarily depend on the state pension.
The ONS categorizes a household as mainly reliant on the state pension if at least three-quarters of its total income comes from the state pension or similar pension-related state benefits. However, the state pension falls short of providing a comfortable retirement living standard. The Retirement Living Standards by Pension UK indicate that a single pensioner requires an annual income of approximately £13,400 to meet a “minimum” standard of living.
The current full new state pension amounts to £230.25 weekly, resulting in a £1,427 shortfall annually for a “minimum” retirement standard. David Cooper, director at Just Group, emphasized the necessity for additional benefits to bridge the income gap for retirees. Cooper highlighted that many retirees may struggle to find employment, leading them to cut their budgets significantly to cope with the shortfall.
To improve retirement living standards, individuals are encouraged to explore potential eligibility for unclaimed support and benefits. The state pension undergoes annual increases in alignment with the triple lock mechanism, ensuring adjustments based on earnings growth, inflation, or a minimum of 2.5%. This year, the state pension is set to rise by 4.8%, with the full new state pension increasing from £230.25 to £241.30 weekly.
Retirees claiming the new state pension typically need 35 years of National Insurance contributions to receive the full amount. It is crucial for individuals to stay informed about their entitlements and seek out unclaimed support to enhance their retirement income and living standards.