This Morning: Cliff Richard on retirement
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M&G Wealth’s Retirement Revisited Report revealed that only one in three (35 percent) are very confident in their retirement plans. This is a big concern as many people still don’t know how they might make up for a shortfall in sufficient income to fund a comfortable retirement.
According to data from the Pensions and Lifetime Savings Association, a single person will need £20,800 a year (£24,500 in London) and a couple £30,600 (£36,200 in London) to enjoy a comfortable retirement (as of 2021).
This is based on a £74 weekly food shop, two weeks on holiday in Europe a year, and a three-year-old car replaced every ten years.
For those who are looking to make up for a “shortfall in sufficient income to fund a comfortable retirement”, an expert has suggested ways to boost one’s pot and start preparing for the future.
Catriona McInally, investment expert at M&G Wealth, spoke exclusively to Express.co.uk and said: “Rising inflation rates, and the cost of living crisis, have undoubtedly added pressures surrounding people’s retirement plans, and funding more immediate spending needs is understandably the focus for many right now.
“Speaking to a professional financial adviser about how to best to plan your retirement will not only help to give you increased confidence in your plans but can help you plan how you’ll finance future care requirements.”
With 35 percent not confident in their retirement plans, many older Britons are looking to work beyond state pension age to give themselves more time to save up.
For many, it’s either a financial necessity – or a choice. 18 percent explained they simply can’t afford to stop working pre-retirement, this need being significantly greater for women (21 percent) than men (15percent).
Ms McInally saw the risks and urged Britons to do what they can to think about their future and build their pots.
She said: “Start saving into a pension if you haven’t already or increase your contributions if you can – many people regret not having started sooner but it’s never too late.
“If you’re still working, make the most of any matching contribution available from your employer.
“Plan as a couple – having two lots of income rather than one means you can utilise two personal allowances. Remember – even ‘non earners’ can contribute up to £3,600 per annum to a pension.”
Alternatively, Britons could consider moving any other investments they have into a pension.
This way they could benefit from an immediate 25 percent growth because of the tax relief.
She suggested that Britons should check to see if they have any pensions, perhaps from previous jobs, that they have forgotten about.
Higher earners are also in for a “nasty shock in store” when they hit retirement and realise they haven’t saved enough to give them the income they were expecting.
Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown said: “Times are undeniably tough for everyone right now and for many people the kind of comfortable retirement outlined by the Pensions and Lifetime Savings Association would be out of reach – only around 15 percent of all households are on track for such a lifestyle.
“There is a real disconnect here between current and future lifestyles that needs to be addressed.
“With the cost of living crisis continuing to squeeze our budgets, now may simply not be the time to shovel more money into a pension, but regular prompts to assess your pension contributions could prove hugely useful in terms of getting people to back on track when times get better.
“Boosting contributions when you get a salary increase or change jobs can really work as you don’t miss the extra money and it’s something that could help everyone – not just higher earners – boost their pensions for the future.”
Britons are encouraged to seek help from a financial adviser.
They can help understand their financial objectives and create a realistic plan to achieve them.
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