Pension saving can derive from a number of sources including the state pension, workplace pensions and private arrangements. Many people will embark upon their pension journey decades in advance to ensure they have accumulated the appropriate funds for retirement. However, a warning has been issued to those who are saving and those who are not in equal measure.
This is because research has shown the secret to a happy retirement lies in an income of at least £26,000 for a retired couple in the UK.
The Which? research split income targets into three separate categories to reflect the needs of different retired people.
The essential category covered food and drink, housing payments and utilities as well as households goods, clothes and health products.
A comfortable category was seen as including the essentials, as well as regular holidays to Europe and other short-haul destinations, leisure activities, alcohol, tobacco and charity donations.
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While the luxury category encompassed both essential and comfortable, while adding in long-haul holidays, health club memberships, meals out and a new car every five years.
When spending in a “comfortable” retirement bracket, retired couples were found to need £26,000 per year.
This reduces to £18,000 for single people, but soars to £41,000 per year for those looking for a “luxury” retirement.
When looking at a single person, expenses drop slightly, but are still significant.
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For a single person households, essentials are likely to cost £13,000 per year, increasing to £19,000 for those who want a comfortable retirement.
Once again, though, the figure significantly increases to £31,000 for those who are looking for a luxury later life.
The calculations from Which? showed that on average, couples will need around £155,000 alongside the state pension to produce the annual income for a comfortable retirement of £26,000 per year.
Jenny Ross, Money Editor at Which?, commented on the matter.
She called upon the Government to swiftly introduce the pension dashboard - a tool which will enable Britons to monitor their pension savings in one easily accessible place.
Ms Ross also stressed the importance of simplifying annual benefit statements for pension saving.
This, she said, would help Britons truly understand how much they have saved, and what this could be worth in retirement.
However, most of all, it can also aid in the understanding of fees and charges which are often neglected within this sphere.
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