Recent research suggests that older homeowners face an annual shortfall of almost £18,000 between the amount they think they will need to live on when they retire and their actual pension income.
According to the research, most of the over 55s polled said they would need an annual retirement income of £35,196. However, that is 16 per cent higher than the average income of a full-time UK employee and more than double the average pension income of £17,212.
These gaps are regional, as the shortfall is at its worst in Yorkshire and the Humber, where the difference between expectation and reality is £27,723. This is followed by London and the South West, where the gap is almost £20,000.
However, even where the gap is at its narrowest, in the West Midlands, the difference between expectation and reality is still more than £12,000 a year, which is a lot of money to make up.
According to the research, the main reasons for a lack of saving into a pension include rising living costs and mortgage commitments. However, while the introduction of auto-enrolment has boosted savings across the UK, separate analysis of Office for National Statistics (ONS) data has flagged a problem in private retirement pots.
These figures show that 22 per cent of UK workers aged between 55 and 64 still have no private pension wealth, revealing a “worrying hole” in preparations for later life.
With all of this in mind, anyone who wants to have a comfortable retirement should consider taking professional advice to ensure they save enough.
To find out more about how Kirk Newsholme Financial Planning can help, please contact Richard Leonard at Richard.Leonard@knfp.co.uk or by calling 0113 204 4215.