The state pension is often considered the bedrock of retirement, but people are often encouraged to make their own retirement provisions in addition. However, research has illustrated that for many this is not the case, and they are looking primarily towards the state pension sum in later life.
This is despite the fact the state pension’s annual increase is currently running below inflation.
This means its value in real terms is in fact declining amid the cost of living crisis.
Research from abrdn has shown only 25 percent of this year’s retirees feel very confident they have saved enough for retirement.
A fifth of those leaving the workforce this year plan to rely on their state pension as a main source of income.
“While the state pension is a vital part of funding retirement, it’s crucial that retirees also weigh up any other savings and assets that they may have on making the decision on whether they can afford to retire.
“This includes any funds they have built up through auto enrolment at work.”
The Pensions and Lifetime Savings Association (PLSA) has previously set out several types of lifestyles and how much it would cost people to retire at that living standard.
According to the latest research, the minimum sum needed on top of the state pension to cover all basic needs is £1,272.
However, if someone wishes to have more financial security in a moderate retirement, they will need an additional £11,172 annually on top of the state pension.
Abrdn has also highlighted a new trend of “flexi-retirement”, with 66 percent of new retirees continuing to work into retirement in some form.
Almost a quarter of those who plan to do so said they have been left with no choice due to the impacts of the cost of living crisis.
Mr Titterton has expressed his belief that it is never too early or too late to start planning.
The better prepared a person is for their retirement, the less likely it is that crises will occur in later life.
He has suggested individuals consult a financial adviser, as these professionals can provide tailored assistance.
Mr Titterton added: “A professional adviser can help alleviate worries and concerns and explore all the options consumers might have, to achieve their desired retirement.
“We would urge those close to or recently retired to consider seeking financial advice to help better understand and review their income and spending as well as seeking guidance on how to make their income as tax efficient as possible.”