New research from Aviva shows that the majority of people heading towards retirement (64%) regret not saving more at an earlier stage in their working lives.
Many, understandably, prioritised raising children (42%) and paying off their mortgages (40%) before putting any surplus cash into their pension. However, a third put leisure / holidays (32%); clothing (21%) and their pets (10%) before their retirement income.
Moreover, there are concerns that many people heading towards retirement still don’t know fully how much they will ned to enjoy the retirement they are planning.
Almost four in ten (39%) people over the age of 50 believe that an income of between £10,000 and £20,000 per annum in retirement will be enough to live “comfortably”. This is despite figures announced by The Pension and Lifetime Savings Association (PLSA) in October 2021 stating that £20,800pa will only provide an individual with a “moderate” standard of living in retirement. To enjoy a “comfortable” standard of living the PLSA suggests this would increase to £33,600 per year.
And the message of just how big a savings pot is required in also not getting through to many savers: a quarter (24%) of those aged over 50 believe that a personal contribution of up to 5% of their salary is an “appropriate and achievable” level to attain a savings pot big enough to support them in retirement. This is some way off the 12% target that Aviva believes should be a minimum people need to save to avoid disappointment.
Why advice matters
When asked about financial advice, more than 70% of over 50s say they have never sought financial advice regarding their pension. Almost a third (30%) say they feel they know what they are doing and don’t need financial support, 10% say they rely on their family and friends for support and advice.
Alistair McQueen, Head of Savings and Retirement at Aviva says, “Pensions are more important to more of us than ever before. Automatic enrolment has brought pension savings to millions, but this was only introduced a decade ago and for many, especially those over the age of 50, it is perhaps too little, too late.
“To avoid sleepwalking into retirement it’s important to understand how much you have in your pension, what that money might look like as retirement income and how long you might need that money to last.”
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