Despite the publicity surrounding the need for us all to save more for our retirement, 12% of those about to retire this year will still do so without any private or company pension.
According to the annual research carried out by Prudential, 10% of retirees will be totally dependent on the state pension, while 2% will rely on some form of private savings. The study revealed that many prospective pensioners will start with an income that is approximately £1,450 lower than the minimum income for a single pensioner, as identified by the charity at the Joseph Rowntree Foundation.
It highlights the fact that it is never too early to start saving into a pension. Saving little and often each month can make a small difference. It is the tax breaks in pension contributions that provide you with the biggest bonus to building your pension pot, it all starts to add up.
The statistics do show an improvement in retirement savings over the years. The number of individuals retiring in 2017 without a pension was 14% compared with this year’s 12% and that contrasts even more strongly with 23% in 2008. Prudential’s retirement income expert, Stan Russell, said the figure was ‘still worrying’ though.
“While the state pension is an important part of retirement income, it shouldn’t be the only part and those still in work should, if at all possible, be contributing to a pension and saving towards their retirement,” he commented.
Interestingly, the report also highlighted that women are more likely than men not to have any retirement savings at all. 7% of men will retire without a pension while the figure for women is over double that at 18%. Nevertheless, this is one area where the gender gap is narrowing. In 2016, the figure for women was much higher at 22%, compared with 7% for men and ten years ago, nearly a third of all women would have been entering retirement without a pension. So while progress may seem slow, things are moving in the right direction.
Taking the time to consider your finances with an eye on retirement can prove invaluable. If you would like to speak with one of our pension experts to check your plans are on track, get in touch here.