Although most of us would like to think we have control of our finances, new research shows that 40% of workers over 40 years old have no idea how much they need to save for retirement.
The latest in a welter of recent reports and guides about retirement spending, the data from financial specialists Saga argues more people need help working out how much they should save.
Around one in 10 believe a £25,000 pension pot will see them through retirement, even though the annual return generates only £987 in income.
The firm says that the over 40s struggled to work out how much they would need to fund a basic lifestyle once they give up work.
Although more women than men have trouble coming to terms with how much they should save, eight out of 10 say they do not know how big a pension pot they need to fund a comfortable basic retirement.
Worries over pension guidance
Their estimates of how much they are likely to spend and how much they need to save to fund the lifestyle vary greatly from the actual figures.
Saga’s Sally Merritt said: “The research proves just how desperately affordable advice and guidance is needed. It is a real concern that people in their 40s and beyond are so unaware of what they need in their pension pot to give them the lifestyle they want in retirement.
“This could well be because people underestimate how long they are going to live in retirement, or that they simply don’t understand what sort of income a typical pension pot can generate. Our survey demonstrates how important it is for people to take the time to think about their savings and investments as early as possible to give them time to put a little more away if they think they are not going to have as much as they need.”
How much will your retirement lifestyle cost?
|Over 40s Estimate annual cost||Actual Annual cost||Over 40s estimate of total pension pot needed||Actual income of this pension pot size|
|Basic lifestyle (Bills, food & little left over)||£13,200||£10,400||£126,000||£6,904|
|Comfortable lifestyle (Inexpensive holidays, hobbies & social activities)||£20,500||£18,600||£244,000||£13,300|
|Luxury lifestyle (Expensive holidays and hobbies, such as golf & yacht club membership)||£56,600||£64,000||£500,000||£27,000|
Source: Saga Investment Services