When it comes to funding their retirement, on average, Brits think the State Pension will cover a third (33%) of their overall retirement income, yet in reality it might only cover just over a quarter (26%) of the income needed for a comfortable standard of living, for someone receiving the full amount.
With the State Pension providing so little, Portafina’s research shows that people are failing to adequately prepare for a comfortable standard of living in retirement. More than one in four (26%) believe as little as £11,000 a year will be enough to sustain the lifestyle they want; a shocking £23,650 less than the recommended comfortable Retirement Standard of Living amount.
What’s more, with life expectancy in the UK at age 65 just under 20 years on average for men and women those expecting a comfortable standard of living in retirement could experience a half a million-pound shortfall if they were to solely rely on the State Pension Brits would need an additional £25,540 a year on top of the full State Pension to achieve the recommended comfortable Retirement Standard of Living figure of £34,650.
There are signs that Brits are more realistic about when the will received the State Pension, with the majority predicting they’ll be 69 before they start receiving their weekly payments. And with almost a third of Brits (32%) admitting to not having a personal pension, it’s more important than ever to be saving for your future to allow you to achieve the lifestyle you want.
Jamie Smith-Thompson, Managing Director at Portafina, said: “Knowing how much money is needed to live comfortably in retirement has understandably got Brits scratching their heads. And with the State Pension age set to continue to rise, it’s more important than ever to make sure your retirement savings are geared up for the lifestyle you hope to achieve.
“That’s where creating a retirement plan is key. And personal pensions are a fundamental part of this plan. It’s never too soon to start to prepare for the future. In fact, the sooner you start regularly saving into a personal pension the less you’ll have to put away each month in the long run. That’s why if you have a workplace pension, it’s important to remain opted in. It could mean you have over £110,000 more in your pot when you come to retire*.
“There are more choices than ever when it comes to how and when you use your personal pension. Planning on retiring early? You’ll need to financially bridge the gap between your chosen retirement age and when your State Pension payments kick in. And you’ll need enough money left in the pot to boost your State Pension income. Or, if you’re planning to retire once your State Pension payments kick in, this could mean working until you are 67, maybe longer.
“Whatever you choose to do in retirement and how much income you’ll need, will be completely unique to you. And that’s where talking to a regulated financial adviser can help you get the most from your retirement savings. From understanding the implications of taking money from your pension early, to maximising your pension savings, a financial adviser can help you to decide what works best for your future.”
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