The need to save for retirement has been put into stark focus of late, but unfortunately, far too few people seem to be prepared for the financial pressures that later life can bring, with the overwhelming majority failing to save sufficiently.
That's according to research from investment experts IpsoFacto Investor, which found that 82% of respondents don't believe they're saving enough money to secure a comfortable income in retirement. Even among those who feel they have the capacity to save more, there's a clear lack of awareness over where to start, with 87% admitting that they lack knowledge of the investment market.
This isn't only a concern for individuals, either, as additional research from Hargreaves Lansdown shows that three-quarters of employers believe their staff aren't saving enough – but worryingly, half either underestimate or don't know how much their employees should be saving.
However, there needs to be far more to it than saving into a workplace pension and hoping for the best, as numerous studies have shown that making minimum contributions won't be enough to secure a sufficient retirement income. In fact, calculations show that workers should be putting more than 12% of their salary into a pension in order to achieve a comfortable retirement – currently, the minimum contribution (including employee, employer and Government tax relief) is just 2%.
The 12% figure may seem far too high for many workers, particularly those who find they need every penny of their salary to make ends meet. However, even slightly increasing your contributions could make a difference, and if you look at ways to reduce your outgoings, it hopefully won't take too much of a toll on your finances.
Ideally, you'll want to look at other ways to save for retirement, too, with things like stocks & shares ISAs being particularly suited to those with a long-term view. The returns on offer can often exceed the interest rates paid by even the best savings account, and as long as you're aware of the far higher level of risk involved – and make sure to do plenty of research so you understand the market thoroughly – it could be a solution for many.
Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
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