Half a million pounds is the amount working adults reckon they will need to live comfortably in retirement, according to research from financial services provider One Family.
The research revealed that the average person thinks they will need an income of £29,700 a year when they retire. To achieve that income they will need standalone savings of £364,000 to top up a full state pension.
The reality, however, is that savers are falling well short. Those aged 55 typically only have £80,000 saved up and to achieve that target income of just under £30,000 a year, would need to boost their savings by a further £2,500 a month.
More worrying is that a significant number of working adults are not putting any money away for their retirement, with 30% not paying into a pension. A fifth said they couldn’t afford to save while 10% said they had not got around to pension planning. More than a quarter (27%) of those that aren’t saving said they preferred to spend their earnings on the here and now and weren’t prepared to forgo luxuries like holidays and socialising.
It is perhaps not surprising then that more are expecting that they will have to stay in work for longer. Eight million adults (22%) say that they will either work part time in retirement or not retire at all. One in 10 reckon they will have to remain in full-time work long after their conventional retirement age.
Government figures show that there are now more than 1.2 million full-time workers aged over 65, compared to 643,000 10 years ago.
‘Saving little and often is key’
Simon Markey, chief executive officer of OneFamily says: “Retirement is changing in many ways for the better. However, the costs associated are also rising and for many people of working age, saving for what they will expect to need in later life is not realistic given the other financial pressures they are under. For younger workers, this means many are unfortunately simply disengaging and spending their entire disposable income on the here and now rather than saving towards their future goals.”
He adds: “The adage of saving little and often is key here, as it will build up over the long term. Those approaching retirement also need to think about other ways of funding this time of life given the length of time we no longer work.”
Thanks for your comment - the research was based on individual's rather than couples.