As everyday living expenses soar, many people will be worried about the here and now, and covering energy bills as well as other rising costs. However, this could leave adequate pension savings and the expectations of a “comfortable retirement” under threat.
Reducing or delaying pension contributions puts Britons at risk of widening the gap between the amount people believe they need, and what they are actually on track to achieve.
A study by Nutmeg found many people are unaware of the damage they may be doing to their retirement in this regard.
The data showed those aged 65 and over thought they would need £29,500 of post-tax income to live comfortably in retirement.
However, analysis shows those who have private pension savings can expect to receive an annual income of around £16,500 – equating to a deficit of over £13,000.
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For those in the age category 45 to 64, Nutmeg found their private pension will need to be three times higher than the savings accumulated by current retirees to meet their retirement expectations.
Ms Williams continued: “The last few years have been unprecedented in terms of our finances, with the COVID-19 pandemic and now the cost-of-living crisis putting money under the microscope like never before.
“While not impacting everyone, it has been well-reported that this has led to more of us taking stock of our finances, reviewing expenditure and assessing our goals.
“Pension planning and consolidation should be an important part of this review – particularly for younger generations who are less likely to step onto the housing ladder and grow their wealth that way.
“Investing in a pension from an early age, for the long-term, ensures you benefit from compounding and have the best chance of securing the lifestyle you want in retirement.”
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