by Over the past few years, pensions have been pushed firmly to the forefront of our minds, thanks to the success of auto-enrolment schemes and increased media coverage. It’s clearly working, as True Potential Investor’s Tackling The Savings Gap Consumer Savings and Debt Data Q2 2017 report found that 598,000 employers were enrolled into a workplace pension scheme last year, making a collective contribution of £87.1 billion.
Understanding how much you’re likely to need in retirement is crucial to effective financial planning. For an estimate of how much you could need for your retirement, take the Saving For Retirement: How Much Will You Need? quiz created by True Potential Investor today.
But are our other financial commitments affecting how much we’re able to contribute to our pensions? The Q3 2017 release of the report suggests so. During the quarter, 45% of survey respondents failed to make a pension contribution; this was most common in 45 to 54 year-olds (47%). 18 to 24 year-olds had the second largest proportion of people who failed to contribute (44%).
For a fuller picture of Britain’s current situation, consider the above alongside the rest of the report’s findings. It found that a third of its respondents worry about money on a daily basis, while 37% admitted to lying about their debt. Perhaps then it’s not because of a lack of awareness; it may be because their financial situation simply won’t allow them to make a contribution.
On average, £203 was added by those who did contribute to their retirement fund within Q3 2017. In contrast, the average amount of debt taken on by UK consumers each month stood at £370 — significantly higher than the amount put towards their pensions.
What’s more, Brits were found to spend £143 on average on items that they later regretted buying, including food, clothes, alcohol and other items according to the Q3 2017 report. If this money was invested in a pension instead for the full span from age 30 to 65, it could translate into almost £320,000. Based on the fact that Brits believe they will need £23,000 annually to live comfortably in retirement, this amount would be enough to fund 13 years of retirement.
This amount is the equivalent of £4.70 per day. As the above example shows, investing this amount instead could lead to a solid start to your pension pot for retirement. As such, we shouldn’t underestimate the impact that small yet regular contributions can have. This underlines the importance of better financial management to allow us the capacity to add such funds to our personal pension accounts.
