Under-45s face £400,000 pension shortfall

However Sanlam estimates that in order to generate a retirement income of £26,000 per annum1, savers would need a pension pot of £480,000 by the time of retirement. A savings pot of £100k would provide an annual income of just £5,400 in retirement.

57% are aware that they’ll need to save more if they are going to meet their retirement target, but just 13% think it is actually achievable.

Additionally, around a third of under-45s are putting off saving as they expect to receive an inheritance of more than £50,000 so feel able to “live in the now”.

Carl Drummond, senior wealth planner at Sanlam UK, said: “Our research confirms what we have long-feared; that people of all ages are simply not engaged enough with their pension and their financial security in retirement. Despite the best efforts government and many employers, the message is still not getting through that people need to think carefully about how much money they will need in retirement and start saving accordingly.

“Our research highlights that many under-45s see inheritance as a panacea, but that’s a big gamble. Money being passed down from parents or grandparents is often split-up among other family members or, increasingly, used to pay for care costs meaning the under-45s might not inherit what they expect.

“People who retire at 65 can easily live for another 20 years – that’s 240 monthly payslips they need to have saved to be able to enjoy the same standard of living. While that might sound like a lot, building a substantial pension pot that delivers peace of mind as well as funds in retirement is entirely doable, but it requires forethought and a detailed plan. As our research highlights, while it’s never too early to start saving for later life, it’s never too late either.”