New research has shown vast discrepancies in how much money UK adults believe they will need for later life.
A report by Mattioli Woods found that adults believe they need an average after-tax household income of £42,456 a year – or £3,538 a month – in today’s money to feel financially secure and live comfortably in retirement.
However, expectations vary considerably by age and region, the findings showed.
Young adults aged 18-24 believe they will need £55, 272 a year to feel financially secure in retirement, but this figure falls to £36,252 a year among the over-55s.
Regional expectations also differ sharply, with those in London anticipating they will need the highest retirement income of £53,292 a year. This compares to £46,416 among those living in the West Midlands and £44,388 in the South East.
In the North East, expectations were found to be much lower, with people expecting to need £32,232 a year to live comfortably in retirement.
A regional divide was also evident among expected retirement ages, with respondents in the South East and South West expecting to retire at 67, while Londoners believe they’ll stop working at age 64.
Amit Joshi, managing director of wealth at Mattioli Woods, said: “Our research highlights the very different expectations people have about the income they will need to feel financially secure in retirement. While the average figure stands at more than £42,000 a year after tax, the substantial differences between age groups and regions show that retirement means different things to different people. There is no one-size-fits-all retirement income target.
“The amount someone needs will depend on their circumstances, financial commitments and the lifestyle they hope to enjoy. Understanding those individual needs is key to building a realistic picture of what financial security in later life could look like.
“With more than a quarter of people concerned about running out of money in retirement, it is important to look beyond a headline figure and consider how income, savings and wider financial plans can support the retirement someone wants.”
