More than three-quarters of the UK's working population are not on track to save enough for a "moderate" retirement lifestyle, a new report from the pensions trade body Pensions UK has warned. The findings suggest a significant portion of individuals face a substantial drop in income upon retirement, impacting their ability to maintain a comfortable standard of living.

The report defines a moderate lifestyle in retirement as costing approximately £32,700 per year for an individual and £45,400 for a couple. However, it estimates that only 23% of the current working population are projected to achieve this savings level. This shortfall is exacerbated by rising living costs, which have increased the expenses associated with retirement.

Beyond a moderate lifestyle, the report also outlines the costs for a "minimum" and "comfortable" retirement. A minimum standard is estimated at £13,900 annually for one person and £22,500 for two. Around 82% of workers are expected to meet this basic threshold. Conversely, a comfortable retirement requires an estimated £45,400 for a single person and £62,700 for a couple, a level only 9% of workers are on course to reach.

The implications of these figures are significant, with Pensions UK highlighting the risk of a "cliff-edge drop in income" for many retirees. Zoe Alexander from Pensions UK stated that without intervention, individuals are likely to experience a drastic reduction in their financial resources when they cease working, which is out of step with public expectations for later life.

The income figures used in the report were independently calculated by the Centre for Research in Social Policy at Loughborough University. These calculations are intended as a guide for retirement planning. The minimum standard, for instance, includes provisions for weekly groceries, a modest holiday within the UK, occasional dining out, and affordable leisure activities.

Increases in the required retirement incomes compared to previous years are attributed primarily to the rising costs of food and social activities. While these increases generally align with inflation, the report specifically excludes housing costs, emphasizing that individuals should adjust these figures to account for their personal circumstances, especially if housing expenses are a significant factor.

Pensions UK suggests a multi-faceted approach to address the savings gap, advocating for action from workers, employers, and the government. These stakeholders could collaborate to encourage and facilitate increased retirement savings among the workforce.

While the report provides valuable benchmarks, it acknowledges the need for personalization. Individuals are encouraged to use the provided standards as a starting point and adapt them to their specific needs and anticipated expenses, particularly concerning housing, which can vary greatly and significantly impact retirement finances.