Millions of people in the UK face an impoverished retirement because they are not saving enough, new figures show.
The current average annual income that someone currently aged 55 and over can expect on reaching State Pension age is £15,890 – including their state pension. However, according to the online investment site, True Potential Investor, this figure is more than 30 percent below the £23,000 pa required for a comfortable life in retirement.
The study of 40,000 UK savers showed that 20 per cent of over-55s planned to work beyond retirement age in order to plug the gap, while 50% are prepared to live on a lower income and give up work as planned.
On average, those aged between 55 and 64 said they are currently saving £92 a month towards their pension, compared with an average across all age groups of £358 a month.
Many, according to the report, have no plans in place to cover additional outgoings like care costs – which can often be in excess of £40,000 a year.
The size of the current average pension pot is just £50,000. Factoring in receiving the maximum state pension (currently £8,545.50) would mean a retiree requiring an additional personal pension pot worth £289,090 in order to reach the £23,000-a-year mark regarded as “comfortable”.
David Harrison, the managing partner of True Potential Investor, said: “The earlier people start saving, the better, if working beyond retirement and money worries in later life are to be avoided.”
Finding out how much you will need to put away in the years before you plan to retire is simple using the RetireEasy LifePlan.
Simply key in your assets, together with the amount you plan to draw out each year, and you’ll be given a readily understood chart showing if you are on track.