Our latest research shows that the cost of saving for a comfortable retirement could be at least £50 per day – more than five times current average savings levels.
We’ve surveyed over 12,000 people as part of our ongoing Tackling the Savings Gap campaign and found that, on average, people believe an annual income of £23,457 is the minimum required to fund a comfortable retirement. This would require a funding pot of £469,140 by retirement.
However, with the average saver expecting to retire at 60, a huge savings gap emerges. A 35-year-old starting to save for a pension now would need to save £52 per day to reach the £23,457-a-year watermark by retirement. A 25-year-old, meanwhile, would need to find at least £37 worth of daily savings.
By contrast, our research into the UK’s saving habits shows that Britons are putting aside an average of just £9.50 per day for retirement.
For someone starting their pension at 35 and retiring at 60, this would deliver an ultimate pension pot of just £86,450, a fraction of the £469,140 required for a comfortable retirement.
Managing Partner, David Harrison said: “Our research shows a clear gap between the retirement expectations of many savers and the likely reality with their current saving habits.
“This has not happened overnight. Instead it is the result of decades of poor or non-existent personal finance education and complicated products. This has been compounded by years of rock-bottom interest rates that have discouraged people from saving at all.
“The keys to closing the Savings Gap are proper financial education, simpler products that are more attractive to savers and technology that allows people to save and invest when they want to.
“The pension freedoms that were introduced on April 6, have at long last given people more options and control than ever in terms of how they will fund their retirement. They are a step in the right direction but the new government must go even further in terms of education and simplifying financial services.”
To ensure your savings are on track, visit www.tpinvestor.com or speak with your financial adviser today. If you do not have an adviser, you can search our directory for your local Wealth Management Partner.