Today is State Pension shortfall day
28th August marks the date that an average retiree would run out of State Pension money.
28th August 2019 16:00
by Edmund Greaves from interactive investor
28th August marks the date that an average retiree would run out of State Pension money.
Today is State Pensions shortfall day. But what does this mean?
State Pensions shortfall day is the day in the calendar year when an average-spending retiree would run out of money, were they to be given a year's worth of State Pension on 1 January and nothing else for the rest of the year.
This means the average retiree will have to make up a 125 day shortfall with their own private savings.
The full State Pension for an individual pensioner is £8,767 a year. However, the average over 65 spends £13,265 per year - an extra £4,498.
While in practical terms this is not how people receive State Pension payments, the day highlights the fact that there is a shortfall of around one third on average for retirees' expenditure.
Stephen Lowe, group communications director at Just Group comments:
"The average retiree given their whole year's State Pension on January 1st would run out this week and have to start relying on their own funds."
"Pensioner couples, assuming they both qualify for full State Pension, will receive £17,534 a year compared to average annual expenditure of £26,244. That leaves a shortfall of £8,710 they would need to find from private funds to meet the average budget, roughly equivalent to another full State Pension.
"The figures show the State Pension remains the bedrock of retirement income for most pensioners, paying for about two-thirds of their annual outgoings on average. They also show how important it is not to rely solely on the State Pension, but to build up private pensions through a working life and use that money wisely during retirement."
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This article was originally published in our sister magazine Moneywise, which ceased publication in August 2020.
These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.
Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.
These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.
Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.