State pensioners face £13,000 income shortfall in retirement

World News

The average pensioner household needs more than £23,670 a year for a comfortable standard of living.

Analysis from pension provider iSIPP found the average household aged between 65 and 74 spends £455.30 a week, or £23,675 a year.

This means total outgoings are more than double the income provided by the full new state pension, which is currently £203.85 a week, or £10,600 a year.

iSIPP managing director, Hrishi Kulkarni, said: “The cost of living crisis is pushing up bills for all households and increasing the cost of maintaining a comfortable lifestyle.

“The pressure can be most acute for retired households who have fewer options to increase their income to keep pace with rising prices and is particularly painful for those households without private retirement savings.”

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The cost of a comfortable retirement has increased by almost a fifth compared to 2021, with costs increasing by around £70 a week.

Fortunately, there are some simple steps pensioners can take to boost their income. State pensioners may be able to increase their payments by topping up any gaps in their National Insurance (NI) record.

A person typically needs 30 years of NI contributions to get the full basic state pension and 35 years of contributions to get the full new state pension.

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Now is a good time to look at topping up as people can currently voluntarily pay contributions as far back as the 2007/2008 tax year, rather than up to six years ago, which is usually how the system works.

People can top up over the extended period until April 2025, after which they will only be able to top up as far back as the usual six years.

Pensioners may also be able to increase their income by £3,500 a year by claiming Pension Credit.

This tops up a person’s income, up to £201.05 a week for single claimants and up to £306.85 for a claimant in a couple.

Claiming Pension Credit may also entitle a person to receive cost of living payments going out this financial year.

A £300 payment is going out to people on certain means-tested benefits, including Pension Credit, in autumn this year, as well as a £299 payment in spring 2024.

A person can check what benefits they can claim using an online benefits calculator, such as the one on the Turn2us website.

Average spending for households aged over 75 drops to £356.30 a week, or £18,527.60 a year. This has gone up 18 percent compared to 2021 when costs were £302.60 a week.

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