Are You Saving Enough For Retirement?

10 January, 2018 | News

A recent study by Aegon (who are international providers of life insurance, pensions and have over £607 billion in assets under management in 25 different countries) has revealed that the average UK worker will require a pension pot of around £301,000 in order to comfortably maintain their current lifestyle in retirement.

The Government’s Auto-Enrolment review in December 2017 highlighted that individuals should aim for 2/3 of their working age income once retired.

For example, those on average UK earnings of £27,000 per annum would require approximately pension income of £18,000 per annum or £1,500 per month.

(A pot of approximately £612,700 is needed to provide an income of £36,960 in retirement…2/3 of a £56,000 per annum earner)

The study showed that the average UK worker entitled to the full state pension of £691 per month would require a further £809 per month to meet the target. The £809 could come from workplace and private pensions.

Below are just some of the reasons contributing to why it can be so difficult to generate the income you require in retirement:

  1. Life expectancies have grown significantly in recent decades meaning people require an income for many more years.
  2. Long term interest rates on which annuities are based are at an all time low.
  3. The assumption is that people will be able to top up their income with the full state pension but they may be entitled to less than they think due to lack of National Insurance contributions.

Whilst Workplace Auto-Enrolment is a step in the right direction, many will still face a pension shortfall which will not go away on its own.

The Money Advice Service offer an online Retirement Calculator but it does have its limitations and should only be used as an estimate.

You may or may not be saving enough to provide you with the income you require in retirement.

For a thorough, impartial evaluation of your Pensions and Retirement Planning – Please contact Graham or David who can assist you through the entire process.

 

*Data from Aegon International as at 03/01/2018

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