24th February 2016
The average person needs to have around £181,000 invested in their pension to generate an income of £10,250 in retirement and matching the current average mix of private and other pension provision says Saga Investment Services.
To buy an inflation-linked pension would require a pot of £287,000.
Gareth Shaw, head of consumer affairs at Saga Investment Services, said: “According to new figures released by the Office for National Statistics (ONS), a private pension now accounts for almost half (43%) of the average retiree’s income in the UK*- highlighting just how important it is for people to plan ahead and save while they can.
“Our analysis shows private pensions and annuities generate an average income of £10,250 per year for the average retiree. To achieve this level of income, a healthy 65 year old would need to have saved £181,000 into their pension pot to buy a level annuity, or £287,000 if they wanted to increase their income each year by inflation with an index-linked annuity.
“Research conducted by Saga Investment Services, found that over 50s remain overwhelmingly reliant (96%) upon cash savings accounts for income, compared with investments. With interest rates remaining at record lows and diminishing returns on cash, it is hardly surprising their overall investment income has been dragged down.
“It is important this age group looks beyond cash and considers other forms of investment, such as stocks and shares ISAs, in order to make their money work harder for them well into retirement and ensure that they can cover the demands of retirement.”