Interactive Investor

Almost 1 in 3 single pensioners fall short of minimum retirement living standard

Alice Guy, our head of pensions and savings, comments on pensioner income statistics.

26th March 2024 10:08

Alice Guy from interactive investor

With the state pension triple lock in the news, interactive investor calculations show that almost one in three single pensioners don't have enough income to meet a minimum standard of living in retirement (based on the PLSA retirement living standards and ONS pension income data).

  • One in three single pensioners (30%) have income below the level needed for a minimum standard of living in retirement
  • Likewise, nine in 10 single pensioners don’t have enough income for a moderate retirement
  • Among pensioner couples, one in five (20%) have income below the level needed for a minimum standard of living
  • Meanwhile two-thirds (67%) of pensioner couples don’t have enough for a moderate retirement income

Pensioner incomes compared to PLSA retirement living standards

Post tax income needed for different levels of retirement 

% of pensioner households earning below this amount after tax and before housing costs

Median household income after tax

Single pensioners

Minimum retirement

£14,400

30%

£17,204

Moderate retirement

£31,300

89%

Comfortable retirement

£43,100

96%

Couple pensioners

Minimum retirement

£22,400

19%

£32,374

Moderate retirement

£43,100

67%

Comfortable retirement

£59,000

86%

Assumptions: incomes based on ONS pensioner income data in 2022-23, uprated to April 24 using OBR inflation forecast for 23/24, amounts needed based on PLSA retirement living standards 2023/24.

Alice Guy, Head of Pensions and Savings at interactive investor, says: “With rising living costs, the amount people need for retirement has spiralled during the last few years. But the stark reality is that a sizeable minority of pensioners are still scraping by on a minimal income in retirement, with one-third of single pensioners earning less than £14,000, below the amount needed for a minimum standard of living in retirement according to the PLSA.

“The problem is that the state pension alone is still relatively low compared to many countries and isn’t enough for even the most basic no-frills retirement, and many don’t even have a full state pension entitlement due to gaps in their National Insurance record.

“If you’re single in retirement, it’s a double whammy as it’s much harder to build private pension wealth and it’s also more expensive to live on your own, with no one to share your costs. It’s especially hard for female single pensioners, who often have a lower income than single men, with 9% less income on average than their male counterparts.

“If you’re surviving on a minimum income in retirement then it’s important to check you’re receiving everything you’re entitled to. Around 850,000 pensioner households could potentially boost their income by claiming Pension Credit, which tops your income up to £201 each week for single people. And if you don’t get a full state pension, then it might be worth paying voluntary National Insurance contributions to boost your state pension income. It can be a great deal, depending on your circumstances, and you could end up with a lot more extra state pension income than you paid in contributions.

“For those not yet retired, making the most of your workplace pension and private pension wealth is one of the best ways to boost your retirement income. If you can afford it, then consider upping your pension contributions when you get a pay rise to boost your pension pot. Consolidating old pensions into one place could also make your pension easier to manage in retirement – check first to make sure you don’t lose out on any valuable benefits. Making small and positive changes to your pension can make a big difference over time and get you one step closer to your retirement goals.”

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