Majority unaware of how much they must save for retirement
A staggering 82% of adults are unaware of how much money they should save to live comfortably in retirement, according to latest research by 7IM.
The study, which assessed the knowledge of over 2,000 people, found that, on average, people believe they will require £23,400 each year for a comfortable retirement, meaning that around £348,000 will be needed to live for 15 years post-employment.
However, when asked how much must be in their pension savings pot to fund this particular goal, they underestimated the amount needed by around 50% on average.
Are you concerned that you may not be saving enough for retirement? Speaking to an independent financial adviser could help.
The results of this research once again highlights the point that without being aware of how much money must be set aside each month to help prepare for retirement, it is almost impossible to adequately plan for the future.
We spoke to Rick Hollington, an independent financial adviser at Octagon Wealth, who had this to say in the wake of the research’s findings:
“As a firm, we often find that clients vastly underestimate the size of the defined contribution (DC) pot needed to generate their desired level of income in retirement.
“Clients are also often surprised at how valuable defined benefit (DB) schemes are in monetary terms, particularly when you let them know the size of the DC pot that would be needed to match the DB benefits that either they or people they know are entitled to.
“Unfortunately, most people only find out how far off they are when they are a few years from retirement, by which point it is often too late to make the substantial changes that would allow them to fully meet their goals.
“With open DB schemes becoming scarcer by the day, it is vital that more people are made aware of their position, including any potential DC shortfalls as soon as possible. By fully understanding their situation, people will have time to make the necessary changes to their saving habits before any such alterations become unaffordable.”