The gap between retirement aspiration and reality is revealed as our latest ‘Tackling the Savings Gap’ research shows that funding a comfortable retirement would leave millions of pension pots empty after just five years.
Our year-long investigation into Britain’s savings and debt habits, involving more than 8,000 people, has revealed that Britons are putting aside only a quarter of the amount needed for a comfortable retirement. This means a clear choice is emerging – to radically change their saving habits or to work longer and accept a ‘minimum wage’ retirement.
We launched our ‘Tackling the Savings Gap’ campaign in August 2013 to examine the true state of Britain’s personal savings and debt habits, as well as the preparations that individuals are making for their retirements. One of the key aims was to identify the standard of retirement that savers are on course to enjoy and just how far away they are from the retirement that many dream of.
Savers have responded by stating that in order to enjoy a comfortable retirement, they would require approximately £23,000 per year as an income from their savings and pension. That target would need a total fund of £469,140 from which savers could draw down 5 per cent over 20 years.
Based on current savings levels however, Brits are only on course to build a retirement fund worth £120,213, meaning that it could only support the desired annual income for five years before becoming exhausted.
We believe that Britain urgently needs to rediscover its appetite for saving and investing if those aspirations are to be met.
Commenting on the findings, our Managing Partner David Harrison, said:
“These figures show the size of the problem we face as a nation. Britain is sleepwalking towards an impoverished retirement and the reality for many in society today is that they will simply be unable ever to retire.”
Despite the figures, savers are not helpless when it comes to addressing the savings gap. With good planning, regular monitoring and timley top-ups, you can save enough for a comfortable retirement. If you would like advice on how to avoid your savings gap, speak with one of our advisers.