SAVING FOR RETIREMENT IS AT AN ALL TIME LOW – AS A “PERFECT STORM” BREWS
The number of people saving for retirement is at an all-time low, according to a report by pensions and investments company Scottish Widows. However expectations for retirement income have actually increased.
The report said that the average level of annual income people would feel comfortable living on at the age of 70 is now £25,200 – up from £24,500 in 2012, despite the ongoing sluggishness of the UK economy.. However, based on this year’s average savings levels, someone retiring at 65 could receive less than half that amount.
“We are being hit with a triple-whammy of, firstly, continued economic uncertainty making it difficult to save for the long-term; secondly the age of first-time buyers rising as we face troubles getting on the property ladder and thirdly an ageing population,” said Ian Naismith of Scottish Widows. “These factors combined create a perfect storm for those heading towards retirement.
We are becoming more aware of the need to save for retirement, we must do more to ensure that we have a comfortable old age.”
Scottish Widows said that – though the majority of workers only start thinking about saving for retirement in their Thirties – savers starting even five years earlier could add almost a fifth (£19 to every £100) in retirement income from their private pension, adding £725 to annual income in retirement for someone earning £25,000 and saving at the average rate of 9.1% of earnings.
Starting to save 10 years earlier could add £39 to every £100, adding an extra £1,500 to annual income in retirement, it said.
Pensions Minister Steve Webb said: “We know that people are not saving enough for their retirement. Only 30% of private sector workers are members of a pensions scheme and this must change.
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