Brits Need More in the Pension Pot

Brits set to retire this year will need an average total lifetime income of £130,000 in addition to state benefits to cover them in their old age, a new survey claims.

But those who retire in the coming 15 years will need even more as state benefits form a lower part of pensioner income and people live longer, according to Prudential.

It estimates that the state pension will account for 44 per cent of pensioner income in 2013/14, down from 50 per cent in 2006.

Life expectancy is also increasing with today's 65 year-old man expected to reach 82 and a woman retiring at 60 likely to live to longer than 85.

Prudential calculate that with the average state benefits coming in at £6,250 a year, pensioners will need an additional £6,250 a year from other sources.

Men will consequently need £106,250 to get them though their retirement with women needing £156,250.

Today's average personal pension fund amounts to £40,000 at retirement, which at current annuity rates will produce an income of just £2,000 a year. On average a saver would need a £300,000 pension fund to ensure annual income of £15,000.

Prudential executive director, Roger Ramsden, said: "Pensioner incomes have risen faster than average earnings over the past eight years, yet today’s pensioners are still grappling with a retirement gap which can only grow unless we all take action.

"Average pensioner incomes, of course, do not tell the whole story. Nearly one-in-five OAPs currently live on just £5,000 a year and one-in-three get by on £7,500. They are depressingly aware of the retirement gap, which for them is the gap between living a comfortable life and living on the breadline."