A Ticket Back to 1984, What You’ll Need to Save for a Comfortable Pension
A recent report by the pension provider Liberty SIPP suggests that as soon as we’re born, we’re already late paying into our pension funds. Low portfolio growth rates, poor yields coupled with increasing human longevity have created an undesirable combination for savings and pensions.
To retire at the age of 65 with a pension fund worth half the average yearly salary (£27,000), children born in the UK in 2014 would have needed to have started saving in the year 1984, leaving newborns already 30 years late putting into their pensions. This shines a harsh light on the governments pension plans, highlighting the shortfalls and underlining how unprepared we are for our futures.
It’s reported that almost 12 million people in the UK are failing to save enough money for their retirement, resulting in either late retirement or insufficient retirement funds. At the age of 65, to ensure an annual income of £13,500 after retirement requires a total pension pot of £250,000. A person saving just the contributions required to generate the average UK pension pot size of £30,000 by age 65 would need to save for 95 years to reach the £250,000 mark.
One of the greatest assets that contributes to many retirees funds is property. However, it’s becoming increasingly hard to develop a worthy nest egg for retirement or to leave for inheritance. The Daily Mail reports that the average age for first time home buyers in the UK is 28 years and if property is bought much later than this, it leaves an “inheritance deficit” for the buyer’s children, creating a vicious circle for property investment among families.
The department of work and pensions advises people to make small changes in order to save enough for their retirement, that’s not enough. It’s becoming increasingly hard to live the life we want and prepare for a comfortable retirement. In reality, most people just aren’t saving nearly enough money, or planning well enough to utilise their property effectively in later life.
At Ernest Grant, we’ve developed a simple 6 step process to plan for you future, without having to sacrifice the present. Don’t get caught out, see how Ernest Grant can help you today with Lifetime Financial Planning – for a more prosperous future.