State pension warning as you may need £727,830 above DWP sum for ‘comfortable’ retirement | Personal Finance | Finance
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The state pension offers important support, with many retirees reliant on the sum to get by in retirement. However, new research from abrdn’s Class of 2022 report suggests Britons may need a lot more cash to fund their later years.
The current new full state pension for the 2021/22 tax year is £9,339.
Some individuals could get less than the new full state pension if they were contracted out before April 6, 2016.
Of course, it is important to note some individuals are on the older “basic” state pension scheme so will get a different amount entirely.
However, the abrdn research has focused on the new state pension alongside the various lifestyles laid out by the Pension and Lifetime Savings Association.
READ MORE: ‘A disgrace!’ Pensioners face 5% fall in living costs
On top of the state pension per year, abrdn calculates £1,561 is required.
The next step up is a moderate retirement, offering “more financial security and flexibility”.
Across a 30-year retirement, those in this bracket may need up to £343,830, working out as £11,461 per year.
Finally, there is the idea of a comfortable retirement, which many people will be striving for as it offers “more financial freedom and some luxuries”.
According to the report, for this living standard to be achieved, across a 30-year retirement Britons will need £727,830.
This calculates as £24,261 per year.
Individuals should note the standards assume people are mortgage and rent free, so more may be needed if this is not the case.
The Class of 2022 report from abrdn also highlighted concerns about what is to come – such as the ongoing cost of living crisis.
Both the old and new state pensions are set to increase by 3.1 percent in April.
However, with inflation soaring to 6.2 percent so far, abrdn has warned “the value of the state pension is also declining in real terms”.
Consequently, the group has encouraged Britons to look into decisions which could help them beat the rising cost of living.
These could be explored by one’s own research through websites such as the Government-backed MoneyHelper.
Alternatively, individuals may wish to take professional advice to assist with their personal circumstances.
Every person’s circumstances are unique, and what is right for some may not be appropriate for others.
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