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Retirement reality 'kicks in at 48' when people finally wake up to needing to save more

Britons spend a large part of their working career unaware of how much they need to save for retirement - finding that reality hits when they turn 48.
 

While retirement seems a long way off for younger workers, pension savers get a wake-up call as they approach 50, when they begin to understand how much they really need if they want a comfortable retirement, a study by insurer NFU Mutual says.

Unfortunately, this means they have missed out on decades of investment growth that could have made a comfortable retirement a lot easier to achieve.

The majority of savers who are unfamiliar with pensions will underestimate the amount they need to save to achieve their desired income for later life, and not realising it until 48 means many could be leaving it too late to do reach their targets.

But Steve Meredith, of NFU Mutual, said it would still leave a decent amount of time to focus efforts on retirement saving so they aren't to badly affected even if they don't hit their targets.

He said: 'People might see these findings and worry or, worse still, bury their head in the sand about their own retirement planning.

'Whether you're 18, 48, or 68 it's absolutely never too early or too late to start making plans for later life.

'Any provision, no matter when made, will give you a bigger range of choices.'

 

More so than ever following the introduction of automatic enrolment, younger people are being asked to engage with pensions.

And while getting people saving in the first place is one challenge, getting them to save enough is another one entirely.

 

By 2018, the minimum total contributions from employer and employee into auto-enrolment pension schemes will be 8 per cent, but industry experts predict people need to save double that in order to get the income they want in retirement.

There are also moves being made to ensure that when they reach retirement, workers will get a decent return for their savings.

The Government is currently consulting on plans for 'defined ambition' pensions that will give workers some form of guarantee about what they'll get in retirement, rather than exposing them wholly to the volatility of annuity and drawdown rates.

So with improvements in the industry helping people get better value from their pensions, the main challenge is on people to save as much as they can.

Mr Meredith said: 'The sooner people stat saving, the more choice they'll have when the time comes to slow down or stop working entirely.'

Source:  thisismoney.co.uk

Sam: 4th Dec 2013 16:56:00

 

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