The hope is that a pension can provide you with the comfortable retirement you strive for. You don’t want you to get to retirement and not find the joys in life, you want you to get to retirement and live some of your very best years.
And yet…according to The Pensions and Lifetime Savings Association (PLSA), the annual cost of having a ‘moderate’ income in retirement has jumped by nearly 40% to £31,300.
The PLSA reported that the cost of living, together with the expectation that grandparents will offer financial support to family members, including grandchildren, had added £8,000 to the estimated income required.
But according to life insurance and pensions company Scottish Widows, securing a guaranteed annual income of £31,300 would require a pension pot of over £750,000! That’s way, way above a lot of people’s expectations, or hopes.
The PLSA uses evidence from focus groups to make the pension estimate, which is intended as a guide for those planning or contemplating their retirement savings.
Their calculations are pitched at three different levels – minimum, moderate and comfortable – and are developed and maintained independently by the Centre for Research in Social Policy at Loughborough University.
They estimated that a single person needed £14,400 a year for a minimum income, £31,300 for the moderate level, and £43,100 a year for a comfortable retirement.
The estimates for couples were: a joint £22,400 at the minimum level, £43,100 at a moderate level, and £59,000 at a comfortable level. Big numbers!
And while the PLSA were announcing their findings, research carried out by Now: Pensions revealed that women would need to work for an extra 19 years to retire with the same pension savings as men. Now: Pensions reported that women retiring at 67 – the new UK state pension age from 2026 – will have saved an average of £69,000, compared with £205,000 for men.
All these facts, figures and debate surrounding pensions can unsurprisingly leave a lot of people confused, even scared.
We would encourage anyone feeling that way to seek out advice when it comes to your pension, and your financial expectations surrounding it. Talking to a trusted pension specialist is a great and informative way to know exactly where you stand when it comes to your retirement.
Are you wondering when you can retire? Well, Lifetime’s detailed research and advice can you help you plan for the future with confidence by making informed decisions. We can look at the impact of retiring at different ages and how this would look for you.
Our pension experts can also help you achieve the best possible income for your retirement.
Get in touch, and thanks for reading: https://www.lifetime-fm.com/pensions/