Marvin OnumonuGen Z could lose up to £69,900 in state pension income with the state pension age rising to 68, according to new analysis by Rathbones.
Rathbones estimated that someone aged 25 today could miss out on two years of state pension payments, worth around £69,900, while a 45 year old could forgo about £42,700, if the state pension age reaches 68 instead of staying at 66.
The figures are based on the new full state pension of £12,548 a year, uprated by 2.5% a year under the triple lock system.
Ed Wood, financial planning director at Rathbones, said: “The elephant in the room for younger generations is that they are likely to face a less generous state pension system than many retirees enjoy today, pushing the bar much higher for what they need to save themselves.
“Many young adults we’ve come across ask for retirement modelling for worst case scenario of no state pension.
“With people living longer and public finances under strain, serious questions are being asked about the long term affordability of the triple lock – with the Institute for Fiscal Studies warning it could cost up to £40 billion a year by 2050.”
Wood added: “That means the onus is increasingly falling on individuals to build a robust retirement pot themselves.”
Analysis from Rathbones showed that a single person retiring today at 65 may need about £796,000 in savings to fund a comfortable retirement, rising to £913,000 for a couple, assuming the state pension is paid throughout retirement.
Without the state pension, a single person would need around £1.1m, and a couple would need £1.52m.
Factoring in the state pension and using the 4% drawdown rule, a 25 year old today would need a pot of about £1.68m as a single person, or £1.86m as a couple to retire at 65.
Without any state pension, a single person would need £2.42m, and a couple would need £3.35m.
Across age groups, the amount needed for a comfortable retirement declines as retirement approaches, dropping from around £1.54m for a 30 year old to £885,000 for someone aged 60, assuming state pension provision.
Rebecca Williams, financial planning lead at Rathbones, said: “People often ask us if there’s a single ‘right’ number to aim for when saving for retirement.
“There isn’t, but age matters enormously. Inflation quietly erodes even large sums over time, and for younger generations that challenge is compounded by high housing costs, student debt and the cost of living – making it harder to save early, when every pound has the greatest impact.
“Starting early, saving consistently and making the most of workplace pensions and employer contributions can make a powerful difference over time.”
