Retirement is something many people will plan for during their lifetime, whether that’s ensuring they are getting National Insurance credits via Child Benefit or paying into a private pension to supplement their state pension income. However, savers are being urged to plan ahead for their Golden Years, with research suggesting some people may not be financially prepared for the retirement lifestyle they would hope for.
How much is the state pension in UK? Amount will rise in April 2020 State pension 2020: How to apply for state pension
National Insurance thresholds are rising how till it affect you?
Portafina says the research shows that people are failing to adequately prepare for a comfortable standard of living in retirement.
More than one in four (26 percent) think that income of as little as £11,000 a year will be enough to sustain the lifestyle they want.
According to Retirement Living Standards published by the Pension and Lifetime Savings Association in October 2019, this is a shocking £22,000 less than the recommended comfortable Retirement Standard of Living amount.
The Retirement Living Standards said that a comfortable lifestyle for a single person is estimated to require an income of £33,000 – although this may be higher if a person lives in London or the South East.
READ MORE: ISA: Savings expert explains common mistake savers make
State pension amount: Britons are being urged to plan ahead for their retirement (Image: GETTY)
Should a person receive the full new state pension of £9,110.40 per year, then the income gap per year would be £23,890 for a comfortable lifestyle, according to the Retirement Living Standards estimations.
A moderate lifestyle is estimated to cost a single person £20,200 per year, meaning a person with the full new state pension would need an extra £11,090.
The minimum lifestyle costs an estimated £10,200 under the Retirement Living Standards for a single person outside of London, meaning a full new state pension recipient would need to make up a £1,090 difference for this lifestyle.
Jamie Smith-Thompson, Managing Director at Portafina, said: “Knowing how much money is needed to live comfortably in retirement has understandably got Brits scratching their heads.
DON’T MISSCan you keep working while claiming the state pension? [GUIDE]How much will my state pension be in 2020? When is rise? [EXPLAINER]You could be entitled to further income with Pension Credit [INSIGHT]
Retirement: UK Expat pensioners living in EU drops State pensioners over 75 could get free TV licence – who’s eligible?
“And with the state pension age set to continue to rise, it’s more important than ever to make sure your retirement savings are geared up for the lifestyle you hope to achieve.
“That’s where creating a retirement plan is key. And personal pensions are a fundamental part of this plan.
“It’s never too soon to start to prepare for the future. In fact, the sooner you start regularly saving into a personal pension the less you’ll have to put away each month in the long run.
“That’s why if you have a workplace pension, it’s important to remain opted in.
State pension amount: Retirement Living Standards have been launched by the PLSA last year (Image: PLSA)
Martin Lewis on how to boost savings interest on inheritance money
“It could mean you have over £110,000 more in your pot when you come to retire.
“There are more choices than ever when it comes to how and when you use your personal pension.
“Planning on retiring early? You’ll need to financially bridge the gap between your chosen retirement age and when your state pension payments kick in.
“And you’ll need enough money left in the pot to boost your state pension income.
State pension payments may be a form of income however the full amount is less than the Retirement Living Standards (Image: GETTY)
“Or, if you’re planning to retire once your state pension payments kick in, this could mean working until you are 67, maybe longer.
“Whatever you choose to do in retirement and how much income you’ll need, will be completely unique to you.
“And that’s where talking to a regulated financial adviser can help you get the most from your retirement savings.
“From understanding the implications of taking money from your pension early, to maximising your pension savings, a financial adviser can help you to decide what works best for your future.”