Many people dream of a comfortable retirement, yet some could find themselves with barely enough to cover essential costs due to a widespread misconception surrounding the state pension. A financial expert has cautioned that those banking on state pension payments to stretch beyond basic necessities could be in for a rude awakening.

Antonia Medlicott, Founder and Managing Director of Investing Insiders, explained: "Whilst circumstances vary from person to person, the state pension is really only designed to cover your basic needs." She also shed light on the precise figure people will require to achieve their ideal retirement, by combining personal savings with the state pension. According to the latest Retirement Living Standards report, the average cost of a 'minimum' retirement stands at £13,400 per year for a single person.

This figure is intended to account for the bare cost of living for a frugal person, including groceries, use of a free bus pass, and modest luxuries such as a TV licence.

She outlined how savers can work out the sum they'll need based on their personal circumstances and preferences: "The general rule of thumb is to have a pension pot consisting of around 10 times your annual salary before you retire in order to have a moderate to comfortable standard of living.

"An annual pension income of around £31,700 for a single person, or £43,900 for a couple, puts you in the 'moderate lifestyle' bracket, allowing for more financial stability and flexibility than solely relying on the state pension.

"For a 'comfortable lifestyle', this amount rises to £43,900 for a single person and £60,600 for a couple, offering more financial freedom and allowing for more luxuries to enter your budget."

The full new state pension currently stands at £241.30 per week following the April rate increase, working out at approximately £12,547.60 annually. This falls nearly £1,000 short of what is needed for a minimum retirement standard, meaning those who rely solely on the state pension for a comfortable retirement could find themselves significantly worse off.

As of 2023, only roughly half of pensioners eligible for the new state pension were receiving the full amount, with many falling short due to insufficient qualifying years.

These qualifying years are those during which people either received National Insurance credits, made National Insurance contributions, or purchased voluntary credits.

Antonia added: "If you have less than 35 qualifying years, the amount of state pension you receive is reduced accordingly, with the minimum being around £68.90 per week with 10 years of contributions.

"The Government website offers a pension calculator service to help you find out how much you may be entitled to."

Those who find themselves on a reduced income during retirement may be eligible for additional financial assistance from the DWP through Pension Credit. This remains one of the most underclaimed benefits, with many people wrongly assuming their income is too high to qualify. Antonia explained: "(It) is completely separate from your state pension itself. It's a means-tested benefit that's used to top up your income, with the main form of eligibility coming from your average income.

"Singles with an income below £238 a week and couples with a joint income below £363.25 are eligible to claim for it, increasing income to these values.

"Additional Pension Credit is also available for people living with certain other circumstances, and those who receive Pension Credit may also be eligible for other support, including Council Tax reduction and Housing Benefit, so it's important to explore all of the options available."