Most people look forward to the day they can hang up their work clothes and start enjoying retirement, yet worryingly few consider the cost involved. Where you decide to retire can have a significant impact on the amount of money you'll need, too, with research showing that those who want to retire in the city will need an average of £21,000 a year.
That's according to research from Prudential, which found that the UK's city dwellers estimate they'll need a total average annual income of £21,100 in retirement to continue living in the city they call home, well above the £18,100 a year that this year's retirees expect to live on.
Unsurprisingly, the figure changes depending on location, with Londoners believing they will need the highest annual incomes for a comfortable retirement (£26,400), while those in Belfast estimate that they'll need £17,900 a year for the same standard of living.
The research also revealed the cities that are most prepared for retirement; those living in Plymouth, Newcastle and Manchester are the most confident that they're saving enough into their pensions to provide a comfortable retirement, with the proportions standing at 46%, 44% and 43% respectively.
This is compared with those in Belfast, where just 21% of workers think they're saving sufficiently, and only 25% of those in Cardiff are expecting a confident retirement. Londoners are somewhere in the middle, with just over one in three (35%) of those working in the capital thinking they're suitably prepared.
Much of this could be related to whether or not those people are seeking financial advice. In Newcastle, for example, 29% of workers have taken professional advice, compared with just 16% of those in Belfast, and this is reflected in the proportion of people who feel they've saved enough for retirement. It looks as though actively seeking advice could have a positive impact on confidence levels and retirement expectations, highlighting the benefits of this kind of support.
However, the amount you'll need to save into a pension to ensure a comfortable retirement will also depend on how long you think your retirement will be, incorporating both the age at which you expect to fully retire and average life expectancy.
The research found that, across the UK's biggest cities, people estimate that they'll retire just before they turn 64, which means they can look forward to an average retirement of just over 20 years and six months (when including ONS life expectancy data). The figure is slightly higher for those in London (22 years), Norwich and Cardiff (just over 21 years), who can expect the longest retirements; conversely, those in Manchester, Liverpool and Glasgow can expect to be retired for less than 19 years.
Vince Smith-Hughes, a retirement income expert at Prudential, said that, while it's "reassuring to see people being realistic about the money they'll need to live on when they give up work," it's also worrying that so many fear they haven't saved enough to be comfortable.
"In all the UK's largest cities, people are hoping to retire before their State Pension age and on average are likely to be retired for over 20 years," said Vince. "The best approach for most people looking to have control over when they give up work and wanting to make sure they have enough savings to support a long retirement is to save as much as possible as early as possible in their working lives."
He also highlighted the correlation between taking financial advice and expecting to be comfortable in retirement: "For many people looking to secure the best possible quality of life when they give up work, a consultation with a professional financial adviser will help them to plan their pension saving and help to make the right decisions when the time comes to turn those savings into an income."
This shows that, not only do you need to save sufficiently to boost your retirement pot, you also need to know how you can make those savings work harder for you. It's a combination approach that can lead to a far more comfortable standard of living, so start the process by saving as much as you can – ideally into a workplace pension, but don't forget about ISAs and other long-term savings vehicles – and when the time comes, consult our no obligation annuity planning service to get a better understanding of your retirement options.
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