The state pension shortfall is a stark reminder as millions of people are about to run out of money this week.
PENSIONERS are being hung out to dry because their state pension does not cover a third of their annual expenses.
With four months left in the year 2021, the average retired pensioner pair will have already spent the equivalent of two full annual State Pensions. According to a research by retirement specialist Just Group, this marks the start of State Pension Shortfall Day.
Two full State Pensions are worth £18,680 per year, and official estimates show that a two-person retired household spends an average of £28,064.
This leaves a £9,384 deficit that must be filled with alternative sources of income, such as private pensions or other savings and investments, or the retired pair will run out of money by August.
Single seniors receiving the full state pension receive £9,340 per year and spend an average of £13,842 per year.
This implies a £4,502 shortage, and this group would have run out of money by September 3 if they did not have additional sources of income.
The government has been said to be considering abandoning the state pension triple lock, which guarantees that the state pension will be increased by the highest of three criteria – the Consumer Price Index (CPI), average earnings, or 2.5 percent.
However, according to research conducted by Just Group, even if the triple lock was enforced at 8%, retirees would still face a shortage when compared to normal spending.
Every year, single retirees would lose £3,500, while retired couples would lose over £8,000.
“The data highlights the limitations of the State Pension for those who rely on it as their main source of income,” Stephen Lowe, group communications director at Just Group, said of the findings.
Mr. Lowe emphasized the importance of people making plans for their post-work lives.
“It serves as a reminder that putting off saving or opting out of a company pension program might leave people in financial difficulty later in life,” he said.
“Those considering taking money out of their pension before they retire should think about what it may entail for their income in a few years or decades.”
Despite the alarming statistics, Mr Lowe claims that persons approaching retirement age have choices for seeking advice.
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