If you want to make sure your retirement isn’t spent worrying about everyday bills, you’ll need to save up at least £260,000, according to pension provider Royal London.
Its new research paper, Will we ever summit the Pensions Mountain? shows that the savings needed to avoid an uncomfortable retirement increased from £150,000 in 2002, to the current figure.
But even that isn’t the end of the story. Younger workers who haven’t benefitted as much from property ownership as older generations could also need to cover rental payments in retirement. That means they might need as much as £445,000 to ward off a fall in living standards.
The figures are based on an average salary of £27,000 and assume a full state pension of £8,500 per year. The £260,000 would equate to £9,000 per year in retirement, giving a total annual income of £17,500, or around two thirds of salary. This is generally acknowledged to be a reasonable level of retirement income if someone wants to maintain their standard of living, but doesn’t have the costs associated with working such as season tickets. They will also most likely have paid off their mortgage.
While amassing a savings pot of this size can sound daunting, with regular contributions into a pension or other retirement fund, it can become much more achievable.
Brunsdon CEO Brian Morman in his book The Little Guide To Your Bigger Future™ says that in retirement, "… regular income is the key to maintaining your chosen lifestyle. And income can only be derived from a capital resource or asset that you have built up or acquired during your life with a view to securing a financially sound future. It really is all about prudence, sound financial advice and forward thinking."
Please contact your Brunsdon Financial Adviser if you’d like to discuss your financial preparations for retirement.
Please note that this information is for guidance only and does not constitute personal advice. The value of investments can go down as well as up and past performance is not necessarily a guide to future performance. The views and opinions expressed in The Little Guide To Your Bigger Future™ are those of Brian Morman. They do not necessarily reflect the views of Brunsdon Financial Service Ltd. Brunsdon is not responsible for the content of external web sites.