According to a new report, workers should be saving at least 12% of their annual wage into a pension.
The report, commissioned by the Pensions and Lifetime Savings Association (PLSA) claims that once final salary pensions are gone, just 3% of savers in modern pension schemes will be able to afford what is considered a comfortable retirement. 12% is given as the minimum that workers should be saving, with employers making up half of that.
The PLSA report states:
“The vast majority of savers do not understand retirement savings, do not know what sort of income they should aim for in retirement, and do not know how to achieve it.
The state pension, private pension savings and property assets are the most significant sources of wealth that most people possess.
Future generations of retirees are, however, much less likely to have sufficient assets to generate an adequate retirement income”.
Why You May Struggle
Reasons given in the report as to why future generations of retirees are likely struggle include the decline of final salary schemes, low contributions into defined contribution pots, less people owning their own homes, increased life expectancy, and higher social care and housing costs. You can read more on the PLSA report on the This Is Money website.
If you are worried about the state of your retirement savings, please get in touch. Our experienced pensions advisers will be happy to help.