SunLife studied the finances of 3,000 over 50s and found that 21% of people in their 50s currently don’t have any private pension savings. The 79% that do, have an average pension pot of £146,666.
According to The Pensions and Lifetime Savings Association to enjoy a moderately comfortable retirement (basic expenditure and some luxuries such as a European holiday) you would need to have £20,200 a year.
The state pension is £8,767 a year for an individual, so to achieve the remaining £11,433 needed for a £20,200 a year annuity (assuming growth of 3% a year) you will need a pension pot of £282,000.
According to SunLife’s calculations, this means on average, people in their 50s are currently £135,334 short. So, assuming 3% growth a year, someone who is now 50 will need to save £357 a month into their pension to reach the £282k target if they want to retire at 65. For someone who is currently 55 this rises to £531 and month while someone who is 59, would need to save £876 a month to be able to retire at 65 on an income of £20,200 a year.
To enjoy a more comfortable lifestyle, which would include more than one holiday, and more spending on home improvements, you would need £33,000 a year.
But for those looking to supplement their income further, exploring vacancies for retired people can offer additional financial stability and purpose during retirement.
Taking into account the state pension and the average pension pot of £146,666 this means someone who is now 50 will need to save £1,669 a month in order to retire at 65 and receive an income of £33,000 a year. This rises to £2,492 a month for someone who is 55 and to £4,125 for someone who is 59.
Simon Stanney, equity release, marketing director at SunLife said: “According to our research, just 9% of people in their 50s are confident they have enough in savings, investments and pensions to fund their retirement; a further 32% say they ‘hopefully’ have enough with a 36% saying they definitely don’t. A further 15% say they are not sure.
“Obviously the average over 50s’ pension pot is not yet mature, and many over 50s will reach their target by the time they retire, but for others, especially those nearing retirement age, the amount they need to save each month is quite substantial if they are to build up a big enough pot to retire ‘comfortably’.”
But, says Stanney, for those over 50s that own their own home, there is another option.
“On average, people in their 50s have seen their homes increase in value by around £133k. Homeowners over 55 could release some of that money – equity – tied up in their home with equity release. It's tax free, there's no need to downsize and the money can be used however they wish, so could help make their retirement more comfortable.”
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