Are you saving enough for retirement? Or, perhaps a more pressing question, are you saving anything at all? Research from Scottish Widows shows that, even though 56% of those surveyed now save adequately for retirement – the highest proportion on record – a worrying number still fail to put anything away, which could leave many at risk of a serious shortfall in income.
The figures show that, outside of specific pension savings, people save an average of £142 a month towards retirement. This is a welcome increase of 8% from the £130 monthly amount saved a year ago, and it means that the average proportion of earnings saved has hit the recommended 12% for the first time in 10 years.
In even better news, 19% of respondents expect to save more in the next year, and 40% feel positive about their long-term financial situation, up from 37% a year ago. On the face of it, it all sounds pretty positive – but all is not as it seems.
Despite the overall improvements, there's been no change in the number of non-savers, with 20% admitting that they don't save at all for retirement. A further 19% have no savings or investments whatsoever, up from 17% a year ago, suggesting that many people could be in for a shock when they hit pension age.
The figures suggest that self-employed workers and those working in small businesses could be at even greater risk of a poor retirement income, and the gap is widening: 39% of self-employed people and 30% of those working in a small business admitted that they're not saving anything at all, up significantly from the 23% who failed to save anything last year.
Lower earners are also at risk – 43% of those with annual incomes under £10,000 don't save anything for retirement, compared with 24% of those earning up to £30,000 and just 9% of those earning more than £30,000 – and even though they may find it harder to save, it could be even worse should they get to retirement with an empty pot.
"A record proportion of people are now saving adequately for the future, showing that the unprecedented changes in the pensions industry have gone some way to engage the nation with retirement saving," said Ian Naismith of Scottish Widows. "But causes for concern remain, as savings levels among the self-employed and those working for small employers declined. The final years of rolling out automatic enrolment will be crucial as it reaches those who have previously not had the opportunity to participate in a workplace pension."
Then, of course, there's the question of how much income you'll need – or want – in order to have a comfortable retirement. Unfortunately, there's a clear disparity between expectation and reality, as although the average income respondents believe they would need to feel comfortable in retirement is £23,469, people saving at the current average level can expect an annual income of £15,600 – an annual shortfall of over £7,800.
"Confusion remains around how actions today translate into money tomorrow, with many people retaining unrealistic expectations about what their income in retirement might be," added Naismith. "The industry and the Government need to continue working together to help people understand the living standard their savings might produce. Having a plan in place, starting to save earlier and putting aside more for later life will mean people will be better prepared to close the retirement aspiration gap."
So just what can you do? The key, as ever, is to start saving as much as possible from as early as you can, be it through your workplace pension or another savings vehicle (or ideally, a combination of the two). Even small amounts can add up over time, so don't think you have to earn a fortune before you can start saving – little and often should be the order of the day, and in doing so, you can hopefully look forward to a retirement income that comes close to matching your expectations.
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