April 7, 2017
According to research from a major investment provider, 4 out of 10 over 40 year olds have no knowledge of the basic costs of retirement. Unfortunately for many, people are blissfully unaware of the amount of money they would need in their pension to fund their future retirement plans.
Experts have suggested that in order to live their preferred lifestyle, individuals will need to save two thirds of their income earned whilst working. Although some people have a good idea of the cost of their own lifestyle, when turned into pension costs it didn’t translate well.
People were estimating nearly half of the amount that would realistically be needed, thinking £126,000 would be an affordable pension pot. However, in reality this will leave just £6,904 per year for individuals to spend now, which works out as just over £570 a month.
When asked people thought that a retirement pot of £500,000 would be able to afford them a luxury lifestyle retirement. Once calculated you would be left with £27,000 annually, which is simply two thirds below the amount of a real income that would achieve an extravagant retirement.
The figures shown above highlight the reality people are facing when the realisation of their actual pension pot hits them.
After the results of this research, it has highlighted the need for more advice in this particularly area, not only for those nearing pension age but young adults! It has been suggested that pension guidance may be needed in order to adequately prepare the population for their retirement.
It is becoming a real concern that people already in their 40s are unaware of the monetary values needed in able to live a comfortable retirement. If people continue to believe such information and aren’t educated on the subject, they could find they will be running into a bumpy road ahead due to not investing enough when they could.
If you are reading this and are concerned you may be in the same boat when your pension arrives, call today!
We can help you budget and advise you on how much you can afford and realistically what it will leave you when you wish to retire. For more information, get in touch or visit our website.