The Independent Pensioner

Some 4.5 million pensioners are living on less than £10,000 a year. Will that be your future?

How much would you like to have to live on when you retire? The average UK salary is currently around £24,000 according to the Prudential which, for a pensioner with no mortgage, would be ample to live on unless he had a tendency to want to travel the world by luxury cruise ship on a regular basis!

Unfortunately about a quarter of the nation's pensioners are entirely dependent on the State Pension which amounts to the princely sum of £4,381 a year. And according to the Prudential's half yearly Retirement Index report into pensioner income and lifestyles, even the average pensioner's income is only a little over £12,000.

When you think about the massive increases in gas and electricity prices, not to mention Council Tax, in recent years, it's hardly surprising that two thirds of pensioners have had to cut back their expenditure on heating, electricity and other bills.

So how else are pensioners coping with rising living costs? It would appear that 14% have been forced to return to work on a full or part time basis, 11% have sold assets originally intended to be left as an inheritance for loved ones, while 10% have had to borrow money from a bank or from family and friends.

If it sounds depressing then that's because, frankly, it is! The fact is for you to have an average UK salary in retirement you need to build up a personal savings or pension pot of around £500,000 if you want to 'inflation-proof' it. And guarding your pot against inflation is a necessity these days with increased longevity resulting in a longer retirement period.

A general rule of thumb for anyone who hasn't started saving for retirement yet is to halve your current age and use the resulting figure as the percentage of income you should be putting away. So, if you're 30 and you don't have any savings, you should be saving at least 15% of your salary. However, if you're 45, it should be at least 22.5%.

It's a heck of a big pot to aim for but it's achievable if you plan for retirement early. Remember, the earlier you start the more time you have got to save and the bigger your pot will become.