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Half a million pounds: the cost of retirement

Half a million pounds: the cost of retirement

Category: Pensions

Updated: 19/06/2017
First Published: 27/04/2010

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.
The average UK household will require more than half a million pounds to cover its retirement, a new survey has revealed.

Having studied figures relating to the cost of living, MGM Advantage found that twenty years of retirement will cost the average household £564,227.

However, it is a figure that varies dramatically depending on where people live.

For instance, households in London will need £194,602 more to cover the cost of retirement than those in the North East.

Yet despite the significant and growing cost of living in retirement, the retirement income specialist said a number of factors will see standard annuity rates fall by as much as 20 per cent over the next few years.

These will include the combined impact of people living longer, the effects of quantitative easing and new regulation.

All of these factors make it imperative that people start to save into a pension as early in their life as possible, and make sure they keep track of how their pension pot is progressing.

"There is significant pressure on pensioner income," said Chris Evans, chief executive at MGM Advantage.

"Those people retiring today can expect to live for twenty years but with annuity rates falling and the cost of living rising, funding retirement is a difficult task.

"With such large regional discrepancies in the cost of living in retirement, we wouldn't be surprised if more people considered relocating to other less expensive parts of the country in order to search out a better quality of life.

"They also need to spend more time on ensuring that their retirement income is working as hard as possible for them."

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