Millions of people in the UK are at risk of “dangerously underestimating” the total amount of money they need when it comes to retirement savings.
Survey Reveals UK Adults’ Lack of Awareness on Required Pension Savings for Retirement
A survey carried out by PensionBee, an online pension provider, found out that an important number of people in the UK are unaware of the amount of money they need to save for retirement.
This unawareness will push Britons out of retirement and back into the workforce in their elderly years if they are unable to make their pension savings last.
The survey asked 1,000 working-age UK adults on their pension understanding. It found that 23% of respondents admitted not being aware of the total pension pot size needed to achieve their desired retirement income. Another common answer-from 15% of respondents — was “less than £150,000”.
PLSA Highlights UK Pension Shortfall
The Pensions and Lifetime Savings Association’s (PLSA) Retirement Living Standards highlighted that £150,000 will only fund a “minimum” retirement standard for approximately a decade.
According to the PLSA, the minimum yearly pension amount for a single person is defined as £14,400. This sum can only cover all basic needs and leave a small room for additional expenses.
The majority of estimations presume the average retirement length as approximately 15 years, since the retirement age begins at 66 and life expectancy in Britain is around 81 years.
However, both the pension age and life expectancy are anticipated to increase in the next few years. The State Pension age for both men and women is set to rise to 67 between 2026 and 2028.
In the meantime, life expectancy for men in Britain remains at 78.6 years, whereas women on average live for up to 82.6 years. Surprisingly, the life span has dropped by 38 weeks for men and 23 weeks for women since 2019.
Around 49% of respondents think they would need the total sum of £250,000, which would be enough to sustain a basic retirement surpasses the 15-year average.
Becky O’Connor, the director of Public Affairs at PensionBee, urged working-age Britons to start planning their retirement and to take action as soon as possible.
She said: “It’s hard to plan for retirement without an idea of how much you might need, yet most Brits seem to be unaware of — or worse, dangerously underestimate — the true cost of retirement.
“However, one rule is broadly true: the earlier individuals start paying into a pension, the more likely they are to be able to afford their desired lifestyle, as their pension has longer to grow and the amount they’re required to save each month reduces.
“Consolidating old pensions into one easy-to-manage plan can also simplify the retirement planning process, by providing greater visibility, to make it easier to stay on track for later life.”
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