Shocking data shows just how much State Pension falls short of the cost of living
More than 20% of people have lost a pension pot says expert
We use your sign-up to provide content in ways you’ve consented to and to improve our understanding of you. This may include adverts from us and 3rd parties based on our understanding. You can unsubscribe at any time. More info
While saving for retirement is absolutely essential to get through retirement, pensioners are still struggling to cover the enormous care costs that are common in later life. The average weekly cost of a care home in the UK is four times that of the new full State Pension of £179.60 – estimated to be anywhere between £600 to £800 a month, according to research by the charity Age UK.
Those who need to pay for a care home need to find £400 to £600 per week on top of their State Pension to be able to afford vital care requirements.
Care costs have risen dramatically above the rate of inflation in recent years, becoming unaffordable for most people as pensioner’s average incomes remain generally flat.
The findings beg the question of whether the potential incoming scrap to the triple lock guarantee should actually go ahead.
Chancellor Rishi Sunak is said to be considering a change from triple to ‘double’ lock, to ensure the price of the State Pension doesn’t rise too much.
READ MORE: POLL: Will Boris win next general election after move to break pledge?
If the triple lock stays, the State Pension is on track to grow at the quickest rate in more than a decade, rising £882 in 2022 – an enormous jump on recent years.
But Mr Sunak is reportedly not keen on giving the UK’s elderly such a large boost, even after 18 months of a pandemic.
Earnings data published by the Office for National Statistics recently showed growth was at 8.8 percent due to mass redundancies, wage cuts and the furlough scheme.
All of these have caused a steep fall in average earnings due to the coronavirus pandemic.
Mr Sunak wants to avoid making use of skewed economic data to keep the guarantee going, instead using “underlying” earnings data, which strips away the abnormal effects the pandemic has had on the numbers.
This lower figure comes at around 3.5 percent to 4.9 percent.
In turn, this would increase the annual State Pension payment by £327 – saving the Treasury an estimated £3.5billion.
Matthew Amesbury, Head of Retirement Planning at Purely Pensions, told Express.co.uk that despite the lower than average later in life payout from the Government Brits get, savers should focus on other methods for financing later life.
The State Pension is worth £200,000 – 7 ways to get maximum [INSIGHT]
Inheritance warning: The mistake that will ruin your retirement [ANALYSIS]
Lowering state pension age to 63 will mean ‘reduced’ payments [INSIGHT]
Mr Amesbury said: “Often people mistakenly assume that the State Pension will provide them with enough income to survive in retirement.
“Unfortunately, while the Government’s triple lock system means that the State Pension does increase each year – either by 2.5 percent or to match average wage growth or inflation – someone eligible for the maximum amount today will still receive less than £10,000 in annual income.
“The State Pension costs the Government around 100 billion pounds each year, but it is still less generous than many other European countries.
“So, while it could be argued that people should be provided with a more generous safety net, the truth is that to ensure a comfortable retirement these days people need to consider other income options.
The financial expert advises Express.co.uk readers to make use of the variety of tools available to save well for retirement.
He said: “There are many financial tools and savings options available to those planning for retirement.
“These include the State Pension, private pensions, other savings pots like ISAs and even assets, like property or collectibles.
“It is important that people take all of these different options into consideration when they put a retirement plan together.”
Source: Read Full Article