The amount pensioners need to save to live a comfortable life in retirement has soared by around 75 per cent in a matter of 16 years, analysis today has warned.
Insurer Royal London has predicted that the average pensioner will need a pot of around £260,000 on top of their state pension to maintain a decent standard of living.
The so-called 'pension mountain' has gone up in real-terms since 2002-03, when it was around £150,000, due to people living longer and low interest rates yielding smaller incomes from pension pots.
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But for younger generations stuck in rented accommodation, the figure could be much higher. If around one in three retirees will be renting in the future, then it's likely they'd need £445,000 to live a comfortable retirement.
"This research is a reminder that when we save for retirement we are chasing a moving target," said Royal London personal finance specialist Helen Morrissey.
"If our retirement pot is going to support us through a longer retirement and in an era of lower interest rates, we are going to need to build a much bigger pot than in the past.
"More worrying still, we can no longer assume that we will be mortgage-free homeowners in retirement. For those unable to get on the property ladder during their working life, a large private rental bill needs to be factored in to retirement planning.
"For all of these reasons, we cannot afford to be complacent about current levels of retirement saving."
Morrissey also said that though the mandatory eight per cent contribution rate that is set to come in next April was a "good start", more still needed to be done to create sturdier pension pots.
The government needs to act quickly to nudge people up to more realistic savings levels," she explained. "Without this, many millions of people will face a sharp drop in living standards when they retire."