Most Brits Massively Underestimating Cost of Retirement
- Millennials are £395,000 short on their pension pot estimation
- Half of baby boomers don’t know how much they need for retirement
- Over a third (35 percent) of Brits do not have a pension
- 36 percent of Brits don’t know how much is in their pension
The UK’s future pensioners look set to be cash-strapped as most Brits either have no idea or are wildly underestimating the size of pension pot needed for retirement. Over one in five adults (21%) believe they only need up to £50,000 for their pension pot, totalling approximately £3,333 per year*, according to research by personal finance comparison site, finder.com.
This is dramatically below the recommended pension pot required for a comfortable retirement. As the current state pension sits at just £8,767.20 per year, the recommended pension pot is from £260,000 to £445,000**, depending on accommodation costs in retirement. Finder.com’s survey revealed that Brits on average believe that just £100,000 is enough to fund their retirement.
Millennials least prepared for high retirement costs
The younger generation is expected to have the highest cost of living in retirement than any previous generations due to the house price epidemic, as many millennials are expected to either still be paying a mortgage later in life or will be forking out on rental accommodation.
With this in mind, almost a third of millennials are approximately £395,000 short in their estimation of how much they will need. Almost a third (32 percent) of millennials surveyed believe up to £50,000 will give them enough pension to live comfortably, compared to a quarter (25 percent) of Generation X and 19 percent of baby boomers who believe the same.
Perhaps even more concerning is the number of those working towards retirement that don’t know how much they need for their pension pot. Almost half (48 percent) of baby boomers surveyed by finder.com admitted they don’t know what they need. For non-renters, the recommended pension pot is around £260,000** and worryingly, almost one in four (23 percent) of baby boomers may find themselves short by more than half of that, believing they only need up to £100,000 for their pension pot.
Commenting on the findings, Jon Ostler, CEO at finder.com, said: “It’s often not a priority at a younger age, but the cost of retirement for millennials is something to be prepared for, especially as a higher percentage of this generation are expected to rent in their retirement. It’s also concerning to learn that so many baby boomers are still yet to consider the cost of a comfortable retirement. Our study revealed that almost a quarter (24 percent) of this generation do not yet have a pension.”
“Despite the introduction of the automatic enrolment workplace pension a few years ago, over a third (35 percent) of those surveyed in our study said they still don’t have a pension. For those who do, 36 percent are unaware of how much they currently have in their pot, and a whopping 43 percent of Brits admit they don’t know how much they need to save for a pension.
Jon continued: “Employers must legally provide a workplace pension in the UK so it’s important that employees in the UK are aware of what they’re eligible for, as well as looking into a private pension to top up their pot.”
To find out more about finder.com’s pension survey and for further data, visit: https://www.finder.com/uk/pension-statistics
Note to editors:
- *Referencing current life expectancy in the UK according to ONS as 79-82 years old, and assuming retirement at 65.
- **According to Royal London analysis https://www.telegraph.co.uk/financial-services/investments/investment-pensions-service/what-is-a-good-pension-pot/
- Jon Ostler, CEO (UK) at finder.com is available for comment, opinion or interview opportunities regarding the research.
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Yasmine Triana/Aaryn Vaughan
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finder, Australia’s #1 comparison site, launched in the UK in February 2017.
Founded in 2006, finder has over three million MUUs and has helped consumers make 15 million decisions over the past decade.
finder is entirely independent, offering consumers unbiased content, comparisons and, wherever possible, a full market view.
So much more than just a comparison site, finder provides in depth guides, advice and editorial content to help consumers better understand all the options and products available.
Committed to educating and empowering consumers to make informed choices and ultimately, to make savings, finder’s success is based on the provision of up to date and relevant information supplied by dedicated, round the clock research teams.
Categories currently available in the UK include money transfers, travel money, gas & electricity, mobile, broadband, and TV streaming. New products (including insurance, credit cards, loans, mortgages and pensions) will be rolled out over the coming months.
finder now operates in 10 countries including: the UK, Australia, New Zealand, USA, Canada, Hong Kong, Singapore, Chile, Spain and Mexico, and employs over 120 staff worldwide.