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Half Have No Idea How To Fund Retirement

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Half have no idea how to fund retirement

Almost half of those who want to retire on an income of at least £10,000 a year have no pension to provide it, new research says

A study from life insurer Aegon has found the vast majority of Brits, at 87%, want to retire on an income of more than £10,000 a year, but 40% have no pension provision at all.

The gap between what people expect in retirement and what they will achieve appears to be ever-widening, as the vast majority of Britons still want to retire on a substantial income despite having no pension savings.

Rachel Vahey, of Aegon, says: 'These findings, combined with some of the worst economic conditions for decades, suggest that people must grasp the nettle and address their retirement savings.

'Unfortunately, our research suggests that many people could be sleepwalking into an impoverished retirement because they have not properly planned for the time when they will come to rely on their pension income.'

The study found that almost half of people, at 47.5%, want to retire on between £10,000 and £20,000 a year but just 17% of respondents are satisfied they have made adequate provision for a comfortable retirement.

The stark reality is that the average pension pot at retirement today is circa £25,000.

But to be able to enjoy an income in retirement of £10,000 a year, which includes the full state pension, the typical Brit would need to build up a pension pot of around £110,000.

One of the main reasons for this is because people generally don't realise how long they can expect to live - and therefore how long they can expect to need an income in retirement explains Vahey.

According to the National Statistics office, a man aged 65 could expect to live another 17.2 years, and a woman aged 65 another 19.9 years.

And with life expectancy increasing, one in four children born today are expected to reach 100 years old, the situation is far from improving.

Aegon's survey also found that 47% of people who have pensions savings have accumulated two or more pension pots throughout their working lives, but yet only 27% know the combined current value of their savings.

Women appear to be less likely to know the value of their current pension savings than men, as 77% of women claim they have no idea as to the value, compared to 67% of men.

Aegon also found that far less women than men believe they have made adequate provision for retirement, at 13% compared to 23%.

In addition, 15% of respondents between the ages of 61 and 65 intend to carry on working past their normal retirement age, as they know they will not be able to live on their pension income alone.

Worryingly, the majority 52% of people who have accumulated pension savings stated that they do not know how to go about tracking down details of all their pension arrangements from previous employers.

Vahey adds: 'Pensions are a highly tax efficient way of saving as the contributions receive tax relief, meaning that for every £8 you pay in, the Government adds £2. If you're a higher rate taxpayer, you may still be entitled to more tax relief. In addition, employers often offer pensions as part of your salary package at work, and will contribute towards your pension pot.

From 2012, the Government is introducing automatic enrolment into pensions. This means every employer will have to automatically enrol every worker into a pension scheme and pay a contribution for him or her. People are not being compelled to save in a pension - they can opt out of the scheme if they want to. Nevertheless, if they stay in they too will have to contribute to their pension pot.

In order to achieve a comfortable income in retirement, whenever you start saving you should ideally be putting aside half your age in percentage terms. So, according to Aegon, a 30-year-old who starts saving today should think about setting aside 15% of their salary. Obviously, the sooner you start saving, the more affordable it becomes and the better off you are likely to be in retirement.

Well, I hope a lot of you are going to be OK with taking in your parents in a few years time.

The whole pension issue is a right mess. There is not enough money to cover the system now, and putting money into 'pension' investments when we see the bankers playing roulette with your future is disheartening, and risky.

Taxes will have to go up. Way up.

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Half have no idea how to fund retirement

Almost half of those who want to retire on an income of at least £10,000 a year have no pension to provide it, new research says

I'd be more interested to read about what they expect, not what they want. It's the mismatch between expectation and outcome that's painful ... whether we get what we want is neither here nor there.

Edited by huw

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people generally don't realise how long they can expect to live - and therefore how long they can expect to need an income in retirement explains Vahey.

I know better than this Vahey fella how long I am going to live.

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I'd be more interested to read about what they expect, not what they want. It's the mismatch between expectation and outcome that's painful ... whether we get what we want is neither here nor there.

Well, yes.

As far as I can see, old people just waste their money on useless rubbish.

Just go to M&S and you'll see loads of them buying clothes that they won't live long enough to wear. Just going down to the garden centre now.....I'll observe and report back!

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Anyone who is a higher earner and doesn't have a pension wants their head looking at it. There are other options than giving it to fund managers e.g. keeping it in a savings account. You cannot beat saving the 40% tax.

However, if this changes, I can see a massive exodus from pension funds as people realise that they can do better with their money than the 20% less costs they would save.

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Well, I hope a lot of you are going to be OK with taking in your parents in a few years time.

My parents are better-off in retirement than they were when working. State pension (with its generous benefits package of travel, NHS, various misc. payments) is ample when you're not paying mortgage or rent.

The whole pension issue is a right mess. There is not enough money to cover the system now, and putting money into 'pension' investments when we see the bankers playing roulette with your future is disheartening, and risky.

Fortunately a SIPP allows you to keep control while still getting the tax benefits. For those of us in the current 54% tax band but who can avoid the new 64%/74% bands, it remains transparent and simple.

Taxes will have to go up. Way up.

Taxes already have gone up a lot on account of existing pensioners. More to come, even as the pension package gets less generous.

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My parents are better-off in retirement than they were when working. State pension (with its generous benefits package of travel, NHS, various misc. payments) is ample when you're not paying mortgage or rent.

Fortunately a SIPP allows you to keep control while still getting the tax benefits. For those of us in the current 54% tax band but who can avoid the new 64%/74% bands, it remains transparent and simple.

Taxes already have gone up a lot on account of existing pensioners. More to come, even as the pension package gets less generous.

I agree with all of what you say, although the article is generalizing about the generation(s) following the boomers.

A deficit is a deficit, and one can not argue with the mathematical truths inherit in demographics.

Governments can and do move the goalposts.

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Apart from removing the 40% tax relief, the main threat I see to all pensioners is the government penalising them for having saved for their retirement and introducing some mechanism or redistributing their savings to those who couldn't be arsed.

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Apart from removing the 40% tax relief, the main threat I see to all pensioners is the government penalising them for having saved for their retirement and introducing some mechanism or redistributing their savings to those who couldn't be arsed.

This is where all the means testing crap will come in.

We will all no doubt be tested when we hit retirement age and anyone with more than 20p in the bank will become ineligible for any state benefits. Again the feckless will be rewarded at the expense of the sensible.

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This is where all the means testing crap will come in.

We will all no doubt be tested when we hit retirement age and anyone with more than 20p in the bank will become ineligible for any state benefits. Again the feckless will be rewarded at the expense of the sensible.

It isn't worth means testing; that costs money to do, probably more than would be saved.

Easier to get the red pen out.

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its funny they want you to save and they want you to spend.

They want you to save so they can spend it and then they want you to get in debt so you can spend. Simples.

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the main threat I see to all pensioners is the government penalising them for having saved for their retirement and introducing some mechanism or redistributing their savings to those who couldn't be arsed.

Which is why for now I won't be saving for a pension. Better spending or hiding it away than get penalised for prudence. Or alternatively pay upfront for a trip to Switzerland at 65.

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Well, yes.

As far as I can see, old people just waste their money on useless rubbish.

Just go to M&S and you'll see loads of them buying clothes that they won't live long enough to wear. Just going down to the garden centre now.....I'll observe and report back!

Just got back. The spa bath part has gone now, they were still there a month ago.

Indeed, the oidies were there spending their money on loads of overpriced plants and flowers, garden furniture and other tat. I saw one couple buying a bucket with what must have been 2 seed potatoes growing in it.....4.99! Old people and four year old kids are not to be trusted with money!

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Anyone who is a higher earner and doesn't have a pension wants their head looking at it. There are other options than giving it to fund managers e.g. keeping it in a savings account. You cannot beat saving the 40% tax.

However, if this changes, I can see a massive exodus from pension funds as people realise that they can do better with their money than the 20% less costs they would save.

How long are you going to live for?

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Half have no idea how to fund retirement

Well, I hope a lot of you are going to be OK with taking in your parents in a few years time.

The whole pension issue is a right mess. There is not enough money to cover the system now, and putting money into 'pension' investments when we see the bankers playing roulette with your future is disheartening, and risky.

Taxes will have to go up. Way up.

Why should those of us who HAVE provided for ourselves pay more tax to keep a bunch of penniless pensioners in food and warmth?

They didn't bother sorting anything out earlier, they can't whinge later on.

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Why should those of us who HAVE provided for ourselves pay more tax to keep a bunch of penniless pensioners in food and warmth?

Because we are supposed to be a civilized, educated and compassionate nation.

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Because we are supposed to be a civilized, educated and compassionate nation.

Compassion for those who cannot help their situation is one thing.

But compassion for someone who has spent their life saying "f*** saving for my retirement, I'm having another holiday" and then comes knocking on the door of someone who maybe didn't take that holiday and says "you have to give me some of your money now cos I haven't got any" is quite another.....

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Compassion for those who cannot help their situation is one thing.

But compassion for someone who has spent their life saying "f*** saving for my retirement, I'm having another holiday" and then comes knocking on the door of someone who maybe didn't take that holiday and says "you have to give me some of your money now cos I haven't got any" is quite another.....

An excellent point.

Which is why National Insurance exists.

The problem is it keeps getting robbed by feckless government idiots.

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You'd have to be insane to provide for your retirement by contributing to a pension. Most people won't have, so if you do, they will get it, not you. So you have a choice. Give them your money by contributing to a 'pension' you will never benefit from, or join the throng of the feckless and get a pension anyway from the mugs that believed in the system.

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