Pensioners are facing a real-terms income crisis, with inflation slashing their spending power and leaving them over £9,000 worse off per year compared to 2010.
Despite a modest rise, the average pensioner income now sits at £407 per week—just £15 more than in 2010, new figures have shown.
Adjusted for inflation, pensioners should be receiving nearly £180 more per week to maintain the same standard of living.
In 2010, the average pensioner income was £392 per week, which would be worth £586.76 today, according to the Bank of England’s inflation calculator.
This means when adjusted for inflation, today’s pensioners are missing out on £179 per week, leaving them struggling to keep up with rising costs.
Over the course of a year, that shortfall amounts to £9,308 in lost income—a significant financial hit as the cost of living continues to climb.
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: “When compared to the steep rise from £206 in 1995 to £392 in 2010, it is clear there has been a marked slowdown despite the considerably higher cost of living.
“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.