A recent survey has found ‘retirees’ have around £131,000 in pension savings – half of what they had hoped for.
The research by Standard Life found that pensioners-to-be had aimed for at least £250,000 in their pension pot, but the actual amount meant they were some £480 a month worse off in retirement.
The Firm’s ‘retirement voice report’ found that on current annuity rates, a pot of £250,000 could likely lead to a monthly income of £1,007, or £12,091 in a year, assuming a retirement age of 66.
A pot of £131,000 could see a monthly income of just £527 in retirement, or £6,332 a year, which is a reduction of £5,759 annually.
Albeit a £250,000 pot still falls short of the criteria for a ‘moderate standard of life’, according to the Pensions and Life Savings Association (PLSA).
Unsurprisingly, the ‘takeaway’ from the research – as reported by MoneyAge – was that contributing as much to a pension as early as possible was the key to a good retirement outcome.
Of course, every person’s situation is different and it is often difficult for people to understand what they should be aiming for with their pension plans and indeed when or if to draw down a lump sum on their pension pot. Should you prioritise long term saving over immediate concerns?
Seeking advice and being as informed as possible is the first step – and in plenty of time so there are no nasty surprises.
Do you have a specific plan for your retirement? How much income do you need? Will your outgoings increase, fall or remain the same? Are your investments and pensions working as hard as possible for you?
Are you planning effectively for the best possible retirement, however you may prefer that to look? What kind of legacy (if any) do you wish to leave for family or dependants?
From the level of risk to the voluntary contributions you can afford to make and the timing, this will all impact the final provision and you can never start too soon.
Consider your existing pension plan – would it be advisable to transfer it, perhaps to consolidate different pension pots?
An Independent Financial Adviser (IFA) such as ourselves would certainly be happy to offer guidance on the options available – it can really be a bewildering minefield and struggling through it alone is not advised.
As part of the Standard Life research, retirees had several regrets, including half wishing they’d thought about their retirement finances at a younger age when they had more time to make changes. More than half (54%) also wished that they had saved more and 53% wished they started saving earlier.
Other regrets included wishing that they had more information about how to plan and prepare (51%), seeking advice or guidance in the run up to retirement (42%) and before they had accessed their pension savings (37%).
For information and guidance you can also Pension Wise, a free and impartial advice service backed by the Government. To find out more, go to www.moneyhelper.org.uk/en/pensions-and-retirement/pension-wise.