Are you facing poverty in retirement?

Pensioners, already dealing with the removal of the winter fuel payment, are now seeing their average income levels fall — and millions risk an even tougher retirement.

According to the Department for Work and Pensions (DWP), the average weekly income for pensioners dropped to £407in the 2023-24 financial year, down from £410 the previous year.

Meanwhile, new research from pension provider Scottish Widows found that 39% of non-retirees — around 15.3 million people — are at risk of not even covering the basics in retirement. The cost of living crisis has pushed this figure up from 35% last year.

Here, Which? looks at ways that you can ensure that your retirement is as comfortable as possible, whether you’re still an employee or have already stopped working. 

Are pension incomes stalling? 

The popular notion is that pensioners have never had it so good. However, recent figures from the DWP on pensioners’ incomes suggest that might not be the case.

Average income for pensioner couples was £595 in 2024 - more than twice that of single pensioners, who received just £282. Younger pensioners also fared better, with average incomes of £455 per week, compared with £372 for those aged over 75.

Overall, average pensioner incomes reached £407 per week in 2023-24 — a huge uplift from the £206 recorded in 1995. But growth has slowed. In 2010, the average income stood at £392 and has since levelled off.

There are several reasons for this. Pensioner take-up of income-related benefits has declined — just 20% receive them, compared to 37% in 1995. The decline of generous defined benefit schemes will have contributed to the plateauing of income levels over the past decade or so. 

Getting rid of the state pension triple lock, suggested as a way to cut government expenditure, would lead to a further slowdown in incomes, as many people are still reliant on the state pension. 

• Find out more: how much you need to retire 

3 ways retirees can make their money go further

There are some actions you can take, both large and small, to help your money go further in retirement years. 

1. Top up your state pension

You can still top up your state pension even if you’ve started receiving it or have passed state pension age but haven’t applied for it yet.

This is as long as you come under the 'new' state pension system and reach pension age on or after 6 April 2016.

If you're on track to get less than the full level of the new state pension (£230.25 a week), you can give your income a boost.

You do this by making voluntary National Insurance (NI) contributions to fill any gaps in your NI record. This will add more qualifying years to your record and potentially increase your state pension.

You can only fill gaps in your NI record from the past six years. The deadline for topping up older years has now passed. 

For 2024-25 and 2023-24, the rate is £17.45 for a week of missing contributions. It would cost you £907.40 to cover the full year. The rate for 2025-26 is £17.75 a week. 

For years between 2019-20 and 2022-23 inclusive, the rate is £15.85 a week (£824.20 a year).

• Find out more: how to top up your state pension

2. Claim over-60s perks and benefits

There are various perks and discounts you can claim once you're in your 60s to help with your budgeting.

In most parts of England, you qualify for a free bus pass – usually covering travel between 9.30am and 11pm – once you reach state pension age (currently 66).

Those living in Scotland, Wales, Northern Ireland, Merseyside and London can claim the travel concession at 60, with free rail, Tube and tram travel sometimes included.

The Senior Railcard is available to travellers aged 60 or over. It costs £35 a year (or £80 for three years) and gives you a third off standard and first class anytime, off-peak and advance fares.

Once you reach 60, you can get free prescriptions and NHS sight tests in England. Prescriptions are free for everyone elsewhere in the UK (as are eye tests in Scotland).

You'll also be entitled to free NHS dental treatment if you're receiving pension guarantee credit.

• Find out more: over-60s benefits

3. Don’t forget about pension credit

Pension credit gives you extra money to help with your living costs if you’re over the state pension age and on a low income

Depending on your circumstances, there are some additional allowances and benefits that you may get via pension credit, including the winter fuel payment. 

There are two parts to pension credit – guarantee credit and savings credit – and you may get one or both.

In 2025-26, if you're over the state pension age and single, and your income is less than £227.10 a week, guarantee credit will top you up to that amount. For a couple, the combined income figure is £346.60.

Only people who reached state pension age before 6 April 2016 qualify to claim savings credit. 

If you think you may be eligible, it's worth using the government's pension credit calculator.

You’ll need details of your earnings, benefits and pensions, and your savings and investments. You’ll also need the same details for your partner if you live with them.

• Find out more: pension credit explained

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3 ways pre-retirees can boost their future income

Still working? A few smart moves now could lead to a more comfortable retirement.

1. Keep your retirement savings on track

To help you save enough for retirement, you'll need to have at least a rough idea of how much you need.

To make this easier, the Pension and Lifetime Savings Association (PLSA) has developed three ‘retirement living standards’. These reflect the amounts you’d need for what it describes as a minimum, moderate or comfortable standard of living in retirement.

A moderate retirement equates to expenditure of £31,300 per year for a single person and £43,100 for a couple. 

For a comfortable standard of living in retirement, the PLSA says single-person households need £43,100 a year, while couples need £59,000.

• Find out more: Use our pension calculator to get an idea of how much your pensions will give you in retirement.

2. Increase your pension contributions

Putting more money into your pension, or opting for an employer that offers more generous contributions, can go a long way to help you achieve the PLSA targets. 

Your employer must contribute at least 3% of your salary, and you must contribute 5%, making a total of 8%.

If your employer pays in more than the required minimum of 3% but less than the total minimum contribution of 8%, you only need to contribute enough to make up the difference. 

The sensible move would be to maintain your contribution level of at least 5% to give a substantial boost to your retirement fund. A pay rise is an ideal opportunity to increase your pension contributions above the required 5%.

Some employers will match any extra contributions you make to your pension, offering an opportunity to grow your savings more quickly.

• Find out more: pension auto-enrolment explained

3. Consolidate your pots

Since the introduction of auto-enrolment in 2012, employees are automatically signed up to their workplace pension scheme, meaning many of us will accumulate multiple pots as we switch jobs during our careers.

You can make it easier to keep track of your retirement savings by bringing together some or all of your pots in the same place. 

It can also save you money if you're transferring to a scheme with lower fees.

If you're an experienced investor, opting for a self-invested personal pension (Sipp) will give you more control over your savings and access to a wider choice of investments. 

The much-delayed pension dashboards are due to arrive at the end of 2026. They will enable you to see all your pension savings in one place, although you might want to take the initiative before then to combine your funds in one place.

• Find out more: should I combine my pensions?

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