A recent study by retirement specialist Just Group has shed light on the significant number of households relying mainly on the state pension for their retirement income. According to the analysis of Office for National Statistics (ONS) data, over 1.2 million individuals, including 740,000 single retirees and 500,000 retired two-adult households, are predominantly dependent on state pensions.
These households are defined by the ONS as those where at least three-quarters of their total income comes from the state pension or similar state benefits. However, the state pension falls short of providing a comfortable retirement income. The Retirement Living Standards recommend a yearly income of approximately £13,400 for a single pensioner to achieve a minimum standard of living.
The current full state pension amounts to £230.25 per week, leaving a shortfall of £1,427 annually to meet the minimum living standard in retirement. Director David Cooper of Just Group emphasized the need for retirees to bridge this income gap, which could be achieved by exploring eligibility for additional benefits.
The state pension increases annually in line with the triple lock mechanism, ensuring a rise based on the highest of earnings growth, inflation rate, or a minimum of 2.5%. Starting April 2026, the state pension will see a 4.8% increase, with the full new pension rising from £230.25 to £241.30 per week.
Individuals retiring now typically need 35 years of National Insurance contributions to qualify for the full state pension. It is crucial for retirees to explore potential unclaimed benefits to enhance their retirement standard of living.