A new survey has revealed exactly what we feared: If you’re planning to retire, doing so in the UK is the worst country in Europe to do so.
The report, carried out by the website myvouchercodes.co.uk, looked at a range of factors including the maximum state pension, average life expectancy and the average price of both rent and food. What they discovered was, frankly, shocking.
One of the key figures in the report is £252,740 – that’s the average income shortfall people will face if they fail to save for their pension in early life. Worse still, that figure is far higher than any other European country. Compare that to the income deficit faced by non-savers in France, which totals just £55,590 – a far more manageable figure for those looking to save during their working lives.
It’s important to note that not all countries run a deficit, however. After basic living costs, Spanish pensioners will find themselves with an average surplus of £300,880; perhaps unsurprisingly, it’s Germany that comes up trumps, with a pension surplus of £308,920.
So why are we seeing the UK fall well below its European counterparts? It’s not, as some might assume, the fact that we’re all living longer. Indeed, United Kingdom workers face spending far less time retired than those on the continent – with an average of around 15.5 years, compared to France’s 22.1 years, 17.6 years in Germany, and Spain’s 16.6 years.
Rather, the main problem is that the UK offers a state pension that falls well below those in Europe. And we mean well below. Here, you can expect a pension of £7,440; Germany and Spain offer pensions of £26,366 and £26,630 respectively. As such, is it any wonder that the UK’s pensioners find themselves worse off?
The survey’s reporters did, however, suggest a way to alleviate some of that financial burden – particularly since there’s very little one can do to force the government to raise the basic state pension, or lower the pension age. If facing a shortfall in pensions, the first step they suggest is spending some of that retirement money on a home with lower living costs.
In order to show how accessible this could be, they looked at the average cost of 2-bedroom flats across the continent, finding the more expensive homes were located in France, Italy and Ireland, which cost around £60,000. The cheapest homes could be found in Spain (£30,000) and Cyprus (£45,000).
In addition to this, the minimum monthly cost of food was also studied, revealing that the cheapest destinations were Portugal, Croatia, Greece, Spain and Cyprus. Little wonder, then, that those destinations are so popular for many retirees.
Naturally, however, not all are going to want to go abroad once they retire, which means making serious provisions for later life becomes crucial. In order to combat the rising pension blackhole, and to give savers greater security, the government set up NEST – a workplace pension which sees employees, employers and the state all pay in to the fund. Saving, then, becomes the only real way of avoiding a pension shortfall for UK retirees.