Are young savers being naïve?
A recent study by NOW Pensions http://www.nowpensions.com/blog/young-savers-face-yawning-reality-gap revealed that 18-25 year olds believe they will have around £95,000 in their pension pot when they retire, with men expecting to have £111,000 and women expecting £82,000.
However, are they being slightly delusional when 65% admit to not saving in a workplace pension yet? 26-35 year olds are also just as bad with 53% saying they haven’t started saving yet.
With Auto Enrolment looming for many employers, this is a chance for their employees to invest in their future and get into the habit of saving a little each month which could mean their pension pot is a bit closer to £95,000!
NOW Pensions say that savers would need to set aside around £120 per month and save for at least 30 years to achieve a pension pot of around £100,000. This sounds an healthy amount, but with the UK having an ageing population and - living on average to the ripe old age of 90 years old - this means that our pension pots have to last at least two decades of retirement! According to NOW Pensions a pot of £100,000 will buy you an annuity of about £5,500 per year (in today’s terms): will this be enough for your needs?
So the question is: do you think you’re investing enough into your pension pot?
You should note that pension advice is a highly regulated and highly complicated area. We strongly recommend that you do not take any action without talking to our Chartered Financial Planner, Jenny Armstrong. Jenny can be contacted on jennyarmstrong@robinsonco.co.uk.
