Research by Phoenix Group’s longevity think tank Phoenix Insights has revealed that achieving a comfortable retirement is the top long-term savings goal for people in mid-life, but many face an “uphill challenge” to meet this standard.
It found 5.2 million of this group (59%) are taking action to save more for retirement, including spending less on holidays and luxury items, looking for a second job and prioritising long-term over short-term saving.
When it comes to savings goals for later life, half (50%) of mid-lifers say they are targeting a comfortable retirement, and 43% are aiming to be debt-free before reaching retirement.
The ability to pay off a mortgage will be a significant influence on being debt-free – Phoenix Insights modelling suggests over 13 million people are likely to face ongoing rental or mortgage costs in retirement.
The Pension and Lifetime Savings Association’s ‘retirement living standards’ suggest a savings pot of around £530k in today’s money terms is needed for a comfortable retirement, and that’s on top of state pension income.
The average amount people in mid-life say they have currently saved for retirement is £88k, meaning they will need to save an additional £442k (in today’s money terms) by the time they reach state pension age to achieve comfortable retirement – around six times their current saving pot.
Expectations of a comfortable retirement aren’t limited to those on higher incomes. Additional Phoenix Insights research found nearly one in three UK adults with a salary between £20,000 and £49,999 expect an income of at least the PLSA’s ‘comfortable’ retirement living standard.
Phoenix Insights head of research and policy Patrick Thomson said: “Half of people in mid-life have an ambition to live comfortably in retirement despite only around one in 10 current retirees having a retirement income that is deemed to be comfortable.
“Not everyone will be able to save more, especially amid current cost-of-living pressures, so it’s important there is an adequate financial safety net from the state to support people in retirement.
“There is currently a lot of speculation around the future of the state pension, both in terms of age of access and how much people will receive, but whatever changes might be down the road, we need to ensure the system helps the most financially vulnerable and prevents poverty in later life from worsening.”
If you're looking ahead to retirement and want to work out how you can be comfortable, we can help you review your finances and get you on the right track.
Having a professionally managed financial plan can make the difference between retiring comfortably or working until State Pension age.
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