The ideal retirement would cost £650k
Brits would need more than £650,000 to retire in their ideal manner, according to research.
Over-50s say a retirement of 22 years on average would give them the perfect balance between work and leisure time. They estimate an annual income of £25,875 net of tax would be enough to maintain a comfortable standard of living, a survey by wealth adviser Towry found.
Such an income would require a gross pension fund of some £656,568 (inflation aside).
However, according to the Department for Work and Pensions, some 12.2 million people face retiring on an inadequate income - defined as between half and two-thirds of their working age income depending on the amount they earn.
Indeed, Towry's own research found that just 27% of over-50s workers nearing retirement feel they are in control of their finances, and a further 30% of those aged between 50 and 59 realise they need to consider their future finances more.
Andy James, head of retirement planning at Towry, said: "While the sheer scale of what is needed to provide a comfortable standard of living during retirement may shock some people, what is clear is that the state pension will only go so far.
"Acting on the assumption of a current 63-year-old man who will start receiving the £144 a week single-tier state pension in 2016 (aged 65) the state would only provide £164,736 over 22 years (ignoring inflation). This would leave £491,832 which needs to be generated from pensions and other savings."
He added: "Those who have planned well for their long-term financial future will be much better placed to choose when they retire, and be confident they have built up savings to last throughout their retirement lifetime."
3 ways to top up your pension:
- Work longer
- Increase your contributions to a private pension
- Make full use of your cash and stocks and shares Isas.
An increase in the general level of prices that persists over a period of time. The inflation rate is a measure of the average change over a period, usually 12 months. If inflation is up 4%, this means the price of products and services is 4% higher than a year earlier, requiring we spend and extra 4% to buy the same things we bought 12 months ago and that any savings and investments must generate 4% (after any taxes) to keep pace with inflation. Since 2003, the Bank of England has used the consumer prices index (CPI) as its official measure of inflation (see also retail prices index).