Retirement savers are wildly off target when they set pension goals, according to a new survey.
Half of savers aged between 25 and 40 years old don’t know how much to save for when they retire.
A fifth believe savings of £50,000 are enough – but the recognised amount someone needs to fund a comfortable retirement is between £260,000 and £445,000, says the report from financial comparison web site Finder.
“The younger generation is expected to have the highest cost of living in retirement than any previous generations due to the house price epidemic, as many millennials are expected to either still be paying a mortgage later in life or will be forking out on rental accommodation,” said Finder CEO Jon Ostler.
Two thirds have no pension
“Almost a third of millennials are approximately £395,000 short in their estimation of how much they will need.”
The survey also unearthed some other pension statistics:
- 35% of the adult population say they don’t have a pension.
- 43% of the population admit they don’t know how much they will need.
- Over 55% of people estimate that up to £100,000 is enough to retire comfortably.
- Only 28% of people think they are on track to meet their target
“It’s often not a priority at a younger age, but the cost of retirement for millennials is something to be prepared for, especially as a higher percentage of this generation are expected to rent in their retirement. It’s also concerning to learn that so many baby boomers are still yet to consider the cost of a comfortable retirement. Our study revealed that almost a quarter of this generation do not yet have a pension,” said Ostler.
Savers need to know about saving
“Despite the introduction of the automatic enrolment workplace pension a few years ago, over a third of those surveyed in our study said they still don’t have a pension. For those who do, 36% are unaware of how much they currently have in their pot, and a whopping 43% admit they don’t know how much they need to save for a pension.
“Employers must legally provide a workplace pension in the UK so it’s important that employees in the UK are aware of what they’re eligible for, as well as looking into a private pension to top up their pot.”