One in six (16%) UK adults are using gut instinct to gauge their retirement savings target, new research from Standard Life has revealed.
Concerningly, almost two in five (39%) admit they have not worked out how much they will need at all. This includes 43% of Generation X and 34% of Baby Boomers, many of whom are approaching or past state pension age.
Standard Life said the risks of uncertainty are clear, with nearly half (47%) of those surveyed worried their retirement savings won’t stretch the full length of their retirement, including 31% of Baby Boomers.
Dean Butler, managing director for retail direct at Standard Life, said: “Planning for retirement can feel daunting and with so many factors at play it’s not surprising that people often resort to guesswork.
“Part of the challenge is that calculating how much you’ll need involves a lot of moving parts, inflation and your expected retirement date are considerations, as your lifestyle goals and any additional income sources. Without the right tools or support, it can be difficult to know where to start.”
Butler said people should think about when they want to retire and ensure that the retirement age they have in mind is the one on their pension plans and update this if it’s different.
They should also think about the retirement options available, including drawdown or annuity, and whether combining the options will suit their needs, as well as how much money they may need to achieve their planned lifestyle in retirement and what they’re on track to receive.
“You’ll then need to think about whether your savings can support your ideal lifestyle. You should start by checking the value of your pension plans, and what they might be worth in future. Some people supplement their pension savings with things like income from part-time work, rental properties, or other savings, but everyone’s circumstances are different. Thinking about your own financial situation and planning accordingly can help you make sure your money lasts for as long as you need it to,” Butler added.
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