A new survey by Aviva finds that many over 50s feel they should have saved more over their working lives for their retirement and that many underestimate how much they will need to live comfortably.
Nearly half of over 50s regret not saving into their pension sooner and almost two thirds wish they had contributed more into their retirement savings at an earlier stage, according to a survey by Aviva.
A quarter (26%) of participants in Aviva’s survey stated that they only started paying into their pension after they turned 30, primarily because they did not feel financially stable enough to contribute any sooner (51%). Many prioritised raising children (42%) and paying off their mortgages (40%) before putting any surplus cash into their pension. However, a third put leisure / holidays (32%); clothing (21%) and their pets (10%) before their retirement income.
Almost four in ten (39%) people over the age of 50 believe that an income of between £10,000 – £20,000 per annum in retirement will be enough to live ‘comfortably’. However, The Pension and Lifetime Savings Association (PLSA) said in October 2021 that £20,800pa will only provide an individual with a ‘moderate’ standard of living in retirement. To enjoy a ‘comfortable’ standard of living the PLSA suggests this would increase to £33,600 per year.
A quarter (24%) of those aged over 50 believe that a personal contribution of between 0-5% of their salary is an ‘appropriate and achievable’ level to attain a savings pot big enough to support them in retirement. However, Aviva estimate that a 12% target should be a minimum people need to save to avoid disappointment.
When asked about financial advice, more than 70% of over 50s say they have never sought financial advice regarding their pension. Almost a third (30%) say they feel they know what they are doing and don’t need financial support, 10% say they rely on their family and friends for support and advice. However, after hearing that they could add as much as £47,000 to their pension (over a decade) by taking financial advice, half of them say they would.
Alistair McQueen, Head of Savings and Retirement at Aviva says: “Hindsight is a wonderful thing and life in your 20s and 30s can often take over, with children to raise, debts to pay and holidays to be had. However, it’s important to take stock of your financial situation early. You may not think you have enough spare cash, or that you have years until you retire, but as we found with our survey, most people over the age of fifty (64%) wished that they had paid more into their pension pot, sooner.
“It’s also important that people are realistic about how much they might need to live on in retirement. With more people continuing to pay rent or mortgages after they finish working, it is unlikely that an income of between £10,000 – £20,000 per year will be sufficient to have a ‘comfortable’ lifestyle. To avoid sleepwalking into retirement it’s important to understand how much you have in your pension, what that money might look like as retirement income and how long you might need that money to last.”