Pensioners are facing growing financial pressure as new figures reveal that average retiree incomes have barely increased in real terms over the past 15 years, despite soaring living costs.
With the cost of essentials such as food, energy, and housing rising sharply, this stagnation has left many retirees struggling to make ends meet.
The Department for Work and Pensions (DWP) reports that the average weekly pensioner income now stands at £407 in 2024, up from £206 in 1995. However, growth has stalled, rising just £15 since 2010, when it was £392 per week.
Carolyn Jones, Retirement Director at Scottish Widows, acknowledged some progress but warned that affordability remains a major concern. While the gap between single female and male pensioners has narrowed to just £14 per week, broader financial challenges persist in today’s high-cost climate.
Jones said: “It is troubling that although pensioners’ average weekly incomes have doubled since 1995 – this growth has plateaued over the last 15 years – and in doing so comes up short against the higher cost demands on today’s current and soon-to-be retirees.”
She highlighted that 38 per cent of people are not on track for even a minimum retirement lifestyle, adding that increased productivity and real wage growth are essential to enabling people to save more and boost pension contributions earlier in their careers.
State pension crisis deepens as retirees worse off
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Thomas Lambert, financial planner at Quilter, warns that pensioners are falling behind as inflation outpaces income growth.
He said: “While real terms income levels have stalled, a far smaller percentage of pensioners received income related benefits in 2024, sitting at 20 per cent, down from 31 per cent in 2010 and 37 per cent in 1995.
“This decrease highlights the impact of rising incomes from the State Pension and private pensions, reducing eligibility for benefits. Unsurprisingly, single pensioners were much more reliant on this state support to bolster their pension income.”
The financial strain is felt most by older pensioners and single retirees. According to the latest DWP statistics:
- Single pensioners have an average weekly income of just £282, compared to £595 for pensioner couples.
- Pensioners aged 75 and over receive an average of £372 per week, significantly less than those under 75, who receive £455 per week.
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown said: “Average pensioner incomes have hit £407 per week—a huge uplift since the £206 recorded back in 1995. However, growth has tailed off in recent years.
“Back in 2010, it was £392. There’s lots of reasons for this—for a start, pensioner take-up of income-related benefits has dwindled over the years. One in five pensioners receive them now compared to 37 per cent back in 1995.”
The shift from generous defined benefit pensions to less secure defined contribution pensions has also played a role in the slowdown.
Many retirees who bought annuities may not have chosen inflation-linked options, meaning their pensions are now worth significantly less in real terms.
Despite recent triple lock increases, which have boosted the state pension, concerns remain over whether this system will remain in place.
Yesterday, the Government spared the state pension from benefit cuts in the Spring Statement, but uncertainty lingers over its long-term future.
Morrissey warns that failing to secure the state pension’s future will undermine confidence in the system:
She said: “Rumours continue to swirl around whether the triple lock will remain, and such uncertainty can undermine people’s confidence in the system.
“Putting the state pension on a firm long-term footing is vital to build this confidence and should be considered as the government assesses adequacy issues during the second part of its Pension Review.”
With real incomes declining by £9,000 per year, pensioners must act now to protect their finances. Key steps include:
- Checking benefit eligibility – Millions of pensioners may be missing out on Pension Credit, which could boost their income.
- Reviewing annuities and pensions – Ensuring retirement income is adjusted for inflation where possible.
- Cutting unnecessary costs – Looking for savings on energy bills, council tax reductions, and free financial support services.
- Exploring part-time work options – More retirees are turning to flexible work to top up their income.
With the government yet to commit to long-term pension protections, pensioners are left facing an uncertain future, battling rising costs with an income that no longer stretches as far as it once did.