How much do You need to Retire?
Most Brits are set for a cash-strapped future unless they start getting to grips with how much money they will need to see them through their retirement. A staggering 21% of UK adults believe they only need up to £50,000 ($65,705) in their Pension pot, which would give them just £3,333 ($4379.90) per year, according to research from personal finance comparison site finder.com. The survey further revealed that Brits, on average, believe that just £100,000 ($131,410) is enough to fund their retirement. The current State Pension sits at just £8,767.20 ($11,520.97) per year, with the recommended non-state pension pot between £260,000 ($341,666) and £445,000 ($584,774.50), depending on accommodation costs in retirement.
Millennials Are The Least Prepared!
The younger generation is expected to have the highest cost of living in retirement due to the rapid rise in house prices, as many millennials are expected to either still be paying a mortgage later in life or forking out on rent. The survey found that almost a third of millennials are approximately £395,000 (519,069.50) short in their estimation of how much they will need. Nearly a third believe up to £50,000 ($65,705) will give them enough Pension to live comfortably. This compares with similar thinking from 25% of gen X and 19% of baby boomers.
Baby Boomers Are Not Doing Much Better
Even more concerning is the number of those across all generations working towards retirement who simply don’t know how much they need for their Pension pot. Despite all of their apparent advantages, almost half (48%) of baby boomers admitted that they didn’t know. For non-renters, the recommended Pension pot is around £260,000 ($341,666). Worryingly, 23% of the post-WWII generation may find themselves short by more than half, believing they only need up to £100,000 ($131,410) in their Pension pot.
Make Retirement Planning A Priority
Commenting on the findings, Greg Pogonowski, Senior Associate at Lime Financial and Chief Commercial Officer at Eaton SAKS, said: “It’s often not a priority at a younger age, but the cost of retirement for millennials is something to be prepared for, especially as a higher percentage of this generation are expected to rent in their retirement. It’s also concerning to learn that so many baby boomers are still yet to consider the cost of a comfortable retirement. The study reveals that almost a quarter (24%) of this generation do not yet have a Pension! Despite the introduction of the automatic enrolment workplace Pension a few years ago in the UK, over a third (35%) of those surveyed in our study said they still don’t have a Pension, so goodness knows what the situation is like in countries where there is NO State Pension. For those who do, 36% are unaware of how much they currently have in their pot, and a whopping 43% of Brits admit they don’t know how much they need to save for a Pension. Employers in the UK must legally provide a workplace Pension so it’s important that employees in the UK are aware of what they’re eligible for, as well as looking into a private Pension to top up their pot. For those who live abroad, especially those in the UAE where there is no Income Tax, they should give themselves a “pay cut” and invest in an Offshore Pension without delay”.
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