British pensioners are only saving half as much as they should build a cash pile to generate the money they need to fund a comfortable retirement. Over the 50s were quizzed about how much annual income would fund different levels of retirement lifestyle and how much savings that would be required to generate the income.
The result was they believed a minimum average income of £15,200 would cover just essential spending and that a pot of close to £144,000 would generate this income. However, according to the firm conducting the survey – a fund of that much would only give an income of £7,940 a year for a healthy 65-year-old.
Generally, the survey found men underestimated the cash they needed to match their retirement goals by 41%.
Women were even more unrealistic, undershooting the money they needed to generate the income they expected in retirement falling short by 66%. On average, the over 50s felt £21,630 a year would pay for a comfortable lifestyle.
But most considered a £194,000 pension pot would generate this cash, but in reality, a fund of this size would only give an income of £10,200 a year.
For the over 50s wanting a luxurious lifestyle, with regular holidays and trips out, the target figure was £46,640 income each year, which they thought a pension fund of £420,000 would offer.
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Again the income from a fund of this size fell well short of providing the desired income – generating only £22,720 a year. A fund of almost a million would be needed to hit the target.
It’s worrying the over the 50s are misjudging the level of savings they need for a decent and comfortable retirement income. Our research found that 80% of people simply couldn’t begin to make an estimate of how much they need to save to get the lifestyle they want, with the result that they are severely low-balling their pension and savings plans.
“It’s vital that people take into consideration all of the financial possibilities, sources of income and investment options to hit their retirement income goals.”