To make up for a pension shortfall, maximize contributions to employer-sponsored plans (like 401(k)s) and IRAs, especially using catch-up provisions if over age 50. Other effective strategies include delaying retirement to allow for more savings and higher Social Security benefits, reducing current expenses, and considering alternative income sources like part-time work or, in the UK, paying voluntary National Insurance contributions.
Increase pension contributions
If you can free up more cash to go towards your retirement, now's the time to increase your pension contributions. This way you can add as much as possible to your retirement savings and make the most of the tax relief from the government.
If you find yourself in this situation, you'll need to adopt a plan to bridge this projected income gap.
This indicates the plan lacks sufficient funds to meet all future obligations. Employers with underfunded plans may need to increase contributions or take other corrective actions to address the shortfall. Conversely, an overfunded pension plan has more assets than liabilities.
You should request a State Pension statement to see if there is any NIC shortfall and decide if you need to make up any gap in your contribution. If you're unsure, Advice NI(external link opens in a new window / tab) or other free advice organisations may be able to help you.
The 4% rule is a retirement guideline suggesting you can withdraw 4% of your initial retirement savings in the first year, then adjust that dollar amount for inflation annually, with a high chance your money lasts 30 years. Developed by William Bengen, it assumes a balanced 50/50 stock/bond portfolio but doesn't account for taxes or fees and may need adjustments for longer retirements, higher costs, or different investment mixes, with some experts suggesting lower rates (like 3.9%) or dynamic strategies (like guardrails) for modern retirees.
A state-by-state review of unfunded pension liabilities as of fiscal 2022 shows: Illinois' unfunded pension liability was the largest of any state at 197.2% of its own-source revenue, followed by New Jersey (162.4%), Mississippi (149.5%), Connecticut (147.6%), and Kentucky (134.9%).
The $1,000 a month rule is a retirement guideline suggesting you need about $240,000 saved for every $1,000 per month in desired income, based on a 5% annual withdrawal rate (5% of $240k is $12k/year, or $1k/month). It's a simple way to set savings goals, but it doesn't account for inflation, taxes, or other income like Social Security, so it's best used as a starting point, not a complete plan.
If you are going to continue to work part-time, Kevin, forgoing the bridge benefit may be a good idea. The bridge benefit will just increase your income between now and age 65, and push you into a higher tax bracket along with your employment earnings.
Clare Moffat, pensions expert at Royal London, says that one way you can avoid an emergency tax charge is to take a notional amount out of your pension first to trigger a tax code from HMRC. Once this is issued, you can withdraw the amount you need, which should be taxed at the appropriate rate.
From 20 September 2025, the full pension is available, under the assets test, for homeowner singles whose assessable assets are under $321,500 – for homeowner couples the number is $481,500. The numbers for non-homeowners are $579,500 and $739,500 respectively.
Martin Lewis has issued a key state pension update during his Budget special on Thursday, 27 November. The state pension will rise by 4.8% in April 2026, meaning that the new state pension will increase to £12,547.60 a year — just below the frozen personal allowance tax threshold at £12,570.
Pensioners relying on such schemes are unlikely to see any immediate impact on their retirement income. However, it is worth noting that some corporate sponsors' covenants might be impacted, with risks including reduced demand for products, increased costs, supply chain disruption and an inability to raise finance.
Only a small percentage of Americans retire with $1 million or more in retirement savings, with figures from the Federal Reserve and Employee Benefit Research Institute (EBRI) showing around 3.2% of retirees hitting that mark, though some sources cite slightly lower numbers for all Americans (around 2.5%) or higher estimates for households nearing retirement (over 10% of older households have $1M+ net worth, not just retirement funds). The reality is most retirees have significantly less, with the median for ages 65-74 being around $200,000-$609,000 in retirement accounts.
Running out of money in retirement means drastic lifestyle cuts, relying heavily on Social Security, needing to work longer, selling assets like your home, or seeking public assistance for essentials like food, housing, and healthcare, often leading to significant stress and reliance on family or government programs for basic needs.
Roughly 7% to 9% of American households have $500,000 or more in retirement savings, though figures vary slightly by source, with data from late 2025 suggesting around 7.2% and older 2022 data indicating about 9%, showing it's a significant milestone achieved by less than one in ten families, despite higher averages driven by wealthy individuals.