Pensions can be a complex area and the introduction of pension freedom two years ago has been instrumental in making the subject even more confusing to many savers. In fact, according to the Pensions and Lifetime Savings Association (PLSA), the majority of workers are unaware of how much they need to save for a comfortable retirement The organisation believes that more than 13 million people are at risk of not saving enough for an adequate retirement and that the provision of savings targets may be one solution towards helping them understand how much they need to save to achieve specific retirement goals. Its research suggests that 78% of those workers surveyed did not know how to tell whether they were on track.
The PLSA said consultation, running until January, would consider what exact income levels could be needed. In its initial research, the general response among people aged between 55 and 64 years old suggested that a single person might need between £10,000 and £15,000 a year for a minimum standard of living in retirement, £15,000 to £25,000 for a modest standard and more than £25,000 for a comfortable standard. What is required is for the government to commit to the schedule of increasing auto-enrolment contribution levels even further. For many to be able to retire on an adequate income, contributions in excess of 15% of income are needed. For those savers making their own contribution, as much as 50% of your income may be needed if you leave saving for your retirement until much later in life. So, the key is to start saving as early as possible and add as much as you can to your employer’s contribution to your pot.
Advisers will be able to point you in the right direction of how much you need to contribute to achieve your desired retirement income. Remember that these are major decisions, not to be taken lightly and the expertise of a qualified, experienced, independent financial adviser could save you thousands of pounds. For more information contact Ben Morris on 01745 798260 or email ben@morrisfinancial.co.uk
