Pensions - Articles - TISA insights into saving enough for retirement

 “This thorough analysis from TISA adds further weight to the evidence that while auto enrolment has been successful in getting millions more saving for retirement, the current minimum contribution of 8% is simply not going to be enough for most people to live the lives they want in retirement. For many, 12% throughout their working lives is a more realistic benchmark of what they, along with their employer, may need to contribute.

 “In practice, how much you should be saving as a proportion of your earnings depends on your earnings and your retirement aspirations. For low earners, the state pension will replace a higher proportion of working age income, meaning the 8% may be adequate. However, average and higher earners will need to save more. But until now, little attention has been given to the impact of home ownership on income needs in retirement, and therefore on what proportion of earnings people should be saving. Homeowners who have paid off their mortgage are in a better position that those who anticipate renting in retirement, as ongoing rent will be a significant addition to their retirement expenditure.

 “This further strengthens the need to help individuals understand how much they personally should be saving to be able to afford the retirement they aspire to. There’s a key role here for advice as well as more personalised guidance.

 “We hope the Government will consider TISA’s report as it considers the next steps for auto-enrolment, due to be introduced in the mid-2020s.”