One in three savers have moved from an expected ‘moderate’ retirement lifestyle to a ‘minimum’ lifestyle, according to analysis by Wealth Wizards.

The financial planning firm analysed data from more than 40,000 users of the Wealth Wizards Pension Guidance Software as a Service (SaaS) platform and found almost one in five pensioners are not on track for the living standards they would like in retirement.

Additionally, the analysis of the data gathered over the last two years found one in three individuals previously on track for a ‘moderate’ standard of retirement – as defined by the Pensions and Lifetime Savings Association’s (PLSA) retirement living standards – are now on track for a ‘minimum’ standard.

The data showed since 2021, the cost of a ‘minimum’ standard has risen 18%, to £12,800 a year. For a single person to retire on a ‘moderate’ standard, they would need £23,300 a year, a rise of 12% since 2021. A ‘comfortable’ living standard requires an income of £37,300 a year, a rise of 11%.

Additionally, the data showed one in ten of those previously on track for a ‘minimum’ retirement living standard were now below that.

Wealth Wizards chief executive Ben Hampton said the research found many are at risk of “sleepwalking” into poor retirement living standards, adding many don’t have access to financial advisers to help address the issue, either due to cost or because they may think their situation doesn’t warrant this.

“These are exactly the people who would benefit from increased access to advice and more personalised guidance and, rightly, the regulatory focus on helping customers at this key life stage is intensifying.

“The thematic review of retirement income advice is only adding further interest to how customers are supported, and the long-awaited review of the advice/guidance boundary is expected to bring new innovative guidance and advice models.”

However, Hampton said “time is of the essence” given the current economic climate, and said the industry should come up with ways to move forward on the issue, in order to help those struggling.

It comes as Office for National Statistics (ONS) data showed average incomes for pensioners fell from £817 in 2020/21 to £791 in 2021/22, equivalent to an £1,352 annual decline. Incomes dropped by £728 a year for single pensioners, from an average of £401 a week to £387.

The data showed weekly incomes for pensioner couples are still lower than in 2014/15, when it was an average of £808 a week, while single pensioner incomes were at the same level as in 2016/17.

Additionally, the data showed more than half (56%) of income was provided by the state for single pensioners, and 38% of pensioner couple’s income.

Broadstone head of defined contribution (DC) workplace savings Damon Hopkins said the data suggested many suffered from declining living standards due to inflation and pointed out the state provided a significant proportion of incomes.

“A pensions adequacy crisis is now looming large – a toxic mix of declining generous defined benefit pensions, inadequate savings in DC pensions, investment market volatility and high inflation means retirees will become even more reliant on a triple-locked state pension.

“While we still face economic challenges in the short- to medium term, it’s imperative we don’t lose sight of the need for people to save more – this needs to be a combined government, industry and ‘UK plc’ effort to ensure as many people as possible can realistically achieve a comfortable retirement.

“This, coupled with better innovation and governance around investment strategies, have to be priorities to complete the auto-enrolment success story.”

Read more @ProfessionalAdviser