This Friday is ‘state pension shortfall day’, when the spending power of the average pensioner couple outstrips the full annual state pension. This means retirees must find income from other sources to cover their spending…
Figures from the Office for National Statistics suggest the average retired couple’s spending power is £21,770 a year, while the full state pension for a retired couple brings in £16,939, effectively covering just more than three-quarters of annual spending – or enough until 6 October.
This means from this day onward, households will need to meet their spending from their own sources, which leaves some £5,177 for retired couples to cough up from private pensions, savings and investments.
Pension provider Just warned pension savers accessing pension benefits early following the pension freedom reforms may be unaware of the long-term impact this could have on generating income in later life.
Communications director Stephen Low (pictured) said: “Pension saving requires resilience and patience, paying in over many years and leaving the money invested, to grow until it is needed. Of those accessing pension benefits seven in 10 are aged 65 and, of those, around 60% take a full cash withdrawal.
“That’s fine if they have other sources of capital or income, but many people struggle to save enough into a pension. Taking it out of the pension years earlier than necessary could well harm its future income potential.”