We all hope for a comfortable retirement when we can finally relax and reap the rewards of our working life. However, far too many people are leaving their retirement planning far too late and the investment company Fidelity has now published some alarming statistics which should serve as a wake-up call:
• If you’d like a retirement income of £10,000 per year, you’ll need to have amassed an amazing £334,000 at retirement – assuming ou have around 20 years to do so
• To achieve that pot, you’ll need to save £750 per month over 20 years, £375 per month over 30 years or £200 per month over 40 years
• Employers will typically pay 23.2% of your salary into a final salary pension scheme, but less than 6.7% into a defined contribution scheme
• To speed up the process, think carefully about your investments and aim for the best returns you can get for an acceptable level of risk
• When you’re ready to retire, shop around for an annuity – 68% of people buying an annuity tend to stay with the company they’ve been saving with, but this could cost thousands of pounds a year in lost income if there are better deals available
• Currently less than 25% of final salary pension schemes in the private sector are open to new members, whereas almost all public sector workers have the chance to join such a scheme
That last fact does seem unfair, but if you’re in the private sector it’s time to accept the reality of the situation and do all you can to make the best of it. You’ll need to get a good grasp of what you need to save and how long for to achieve the retirement income you’re hoping for.
For expert advice and guidance on retirement strategies, please contact us.