Everyone has ideas of the "perfect" retirement, but unfortunately not everyone thinks about the true cost of achieving that goal. According to research from LV=, key ingredients for a happy retirement include foreign holidays, socialising, spending time with children and grandchildren, enjoying hobbies and living in an idyllic village – but that dream could add up to well over £225,000.
The figures show that the blueprint for a happy retirement, combined with the typical annual living costs of a retiree (£7,623), will total some £10,820 per year – or £225,756 over the course of an average 17-year retirement.
And, this is assuming that the individual doesn't need additional capital to move to their preferred retirement spot, in which case it could cost even more.
That annual amount may not sound like excessive living, but when you consider that 8% of those aged 60-65 admit they have no form of pension arrangements in place whatsoever, the issue soon becomes apparent. Of those that do, over a quarter (or 27%) don't know the value of their pension pot whilst industry figures show that nearly 30% have a pot valued at less than £10,000, which won't go far towards long-term goals.
Equally, relying on the state pension won't be enough to achieve the desired standard of living. Currently it amounts to just £5,727.80 per year, a long way short of the £10,870 needed annually for a happy retirement, meaning many could face an income shortfall of over £5,000 each year – and of at least £106,243 during their retirement.
That's why it's so important to plan ahead. Aspirations for many British retirees may be modest but it's vital to know how those aspirations are going to be funded, and with many having even higher expectations it's important to be prepared. Regularly contributing to a pension and ideally a separate savings account should be at the top of the agenda, and it's never too late to start saving to ensure you'll have a happy retirement.
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