Recent research1 shows that some people could be sleepwalking their way towards a financially-bleak retirement.
A survey conducted by Aegon2 found that less than a fifth of adults aged 55-64 have more than £300,000 in their pensions – the approximate amount widely considered to be necessary for someone on an average salary to maintain their current lifestyle.
In addition, a survey by Prudential3 shows that the average target retirement date for UK workers is before their 62nd birthday. However, more than one in 10 workers have yet to start a pension and won’t do so, on average, until they are 46 years old. Worryingly, amongst those not yet saving, one in 10 are in the 51 to 65 age-bracket.
Looking at the figures
In order to put an effective retirement plan in place, it helps to have some idea about the amount of money you’ll need to fund the lifestyle you want to enjoy in your later years. Drawing up a budget that covers what you anticipate your likely spend will be and setting that against the income you can expect to receive from your pension(s), savings and investments is a good place to begin.
You should think not just about the income you’re likely to need during the first few years of your retirement, but also plan for a time when you might need to pay for help around the house and for the likelihood of needing medical and nursing care in your later years.
The steps we all need to take
It seems that many people put off finding out how much they have saved and what that will equate to as an income in retirement because they fear the worst. However, there are some simple practical steps that can really help:
- Make pension saving a priority. Consider topping up your contributions whenever your financial circumstances allow. Remember, within limits, they attract valuable tax relief.
- Know your state pension age and get a forecast of how much you’ll receive.
However, carrying out a reality check and scheduling a review is the best way to overcome worries.
The pensions dashboard
At the end of last year, the government announced its plans to give millions of people online access to their pension facts and figures, giving them information about their pension savings, including their state pension. The roll-out is due to start sometime in 2019.
1 Aviva, Sep 2018
2 Aegon, June 2018
3 Prudential, 2016