UK adults face a significant shortfall in the amount of pension savings they have at retirement compared to what they wanted to retire on, new research has found.
On average, retirees had hoped to build up a pension pot of £250,000. However, the average amount that they accumulated by retirement was £131,000, new data from Standard Life has found by surveying 6,350 UK adults.
Based on current annuity rates, a pot of £250,000 could lead to an income of £1,007 monthly, or £12,091 a year, assuming a retirement age of 66.
A pot of £131,000 could result in a monthly income of £527 in retirement, or £6,332 yearly – £480 a month, or £5,759 a year less.
However, the not insignificant £250,000 pot falls short of a ‘moderate’ standard of living in retirement according to the PLSA, including the State Pension.
Dean Butler, Managing Director for Retail Direct at Standard Life said: “It can be hard to work out how much you need to save to achieve your desired standard of living in retirement, particularly earlier on in your career.
“It’s even harder to stick to it, as everyday expenses and those one-off costs that come up in life constantly threaten to move long-term saving down the priority list.
“Clearly there’s a big gap between what people hope to save, and what they actually do – this is unsurprising, particularly when looking at it during a cost-of-living crisis, however the result can be a significantly reduced standard of living in retirement.
“Access to affordable personalised advice and guidance is crucial to closing the gap – as things stand, way too few people feel able to get advice and we can see that people then regret not doing so.
“Ultimately, contributing as much as possible, as early as possible is the key to a good retirement outcome, but it’s a huge challenge to know what to aim for and when to prioritise long-term saving over more immediate priorities.”
Retiree regrets
Retirees also expressed several regrets in relation to their financial preparation for retirement.
Half (50 percent) wished that they’d thought about their retirement finances at a younger age when they had more time to make changes, 54 percent wished they saved more, and 53 percent wished they started saving earlier.
The research found that 51 percent wished they had more information about how to plan and prepare for my retirement, 42 percent said they should have sought advice or guidance to plan for their retirement, and 37 percent said they should have sought advice or guidance before they accessed their pension savings.
