The cost of achieving a comfortable retirement in the UK has soared, but there are four ways for Britons to boost their pension pots.
A couple now needs £59,000 annually for a 'comfortable' retirement, up from £54,500 just a year ago, according to recent figures from the Pensions and Lifetime Savings Association (PLSA).
The PLSA data shows a ‘moderate’ standard of living in retirement now costs a single person £8,000 or 34.3 per cent more than it did in 2022/2023, while the level of funding needed for a minimum or comfortable retirement is also on the rise.
These significant increases are largely attributed to rising inflation and changing expectations for retirement living standards.
The annual new state pension – currently £10,600 and rising to £11,502 in April - will help fund much of the minimum standard but people will need a larger pension pot to purchase an annuity or earn enough from drawdown for a moderate or comfortable retirement.
This widening gap only highlights the growing importance of personal savings and workplace pensions in securing a comfortable retirement.
Soaring inflation pushes retirement costs to new heightsGETTYOnly 13 per cent of those aged 55 and over expect to achieve a 'comfortable' retirement lifestyle.
Rising food, energy and motoring costs have pushed up the amount of money needed in one's pension needed to fund a comfortable retirement, research suggests.
The exact amount someone will need for retirement depends on their own circumstances and varies on what type of lifestyle they wish to live, but Britons are urged to start saving as early as they can.
Given the rising costs of retirement, an expert has suggested several strategies to grow one's pension savings.
Steven Kibbel, a financial planner at Gold IRA Companies told GB News: "If you're looking to grow your retirement savings, there are a few practical tips that can help.
"One strategy is to think about adding gold and silver to your investments. These metals tend to hold their value when the economy gets rocky or inflation rises, making them a potential safeguard for your money.
"A gold IRA company can guide you through adding them to your retirement plan, which can diversify your portfolio and may even bring some tax benefits.
"Another helpful tip is to maximize contributions to your workplace retirement plan, especially if the employer offers a match.
"That match is essentially free money for your future, and it can also lower your taxes.
"If you’re over 50, you can put in even more, thanks to catch-up contributions, which can give your savings an extra boost."
Savers are urged to utilise tax-friendly accounts that allow their money to grow tax-free, potentially accelerating growth like a stocks and shares ISA.
Kibbel said: "Another tip is utilising a Stocks and shares ISA. This is also a solid way to grow your wealth over time By investing in a variety of stocks, bonds, and mutual funds, you can spread out your risk while aiming for steady growth.
"Make sure you’re picking investments that fit your risk tolerance and retirement timeline. It's also a good idea to check in on your portfolio every so often to ensure it still aligns with your goals."
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Additional tips include:
- Exploring annuities for steady retirement income
- Cutting unnecessary expenses
- Paying off high-interest debt to free up more money for savings and investments
Planning for retirement has become increasingly crucial in light of these rising costs. Experts warn of a looming pensions crisis in the UK, with greater numbers potentially facing poverty in retirement due to insufficient savings and Government support.
The UK currently ranks 14th for retirement conditions among 44 developed countries, according to the Global Retirement Index by Natixis Investment Managers. Worryingly, the UK's ranking for finances in retirement fell from 15th to 18th position this year.
To address these challenges, individuals are encouraged to start saving early and regularly review their retirement strategies. It's important to consider personal circumstances and goals when planning for retirement.