Brits facing retirement income gap of £16,000

Although they expect to need a retirement income of £22,596 a year to live comfortably in retirement, people are, on average, currently saving enough to receive just £6,279 a year once they finish work – a shortfall of more than £16,000. 

New research by the specialist financial mutual found people are saving an average of £199 a month, with more than half (58%) admitting they don’t know how much to save for retirement at all. The average age for people to start saving above their basic workplace pension is 32-years-old.

However, people who do delay topping up their pension until that age will actually need to save £716 a month, or more than £8,500 a year, to achieve their retirement income ambitions.

This late start also means people are failing to learn from the experience of previous generations. Wesleyan’s research also showed not saving early enough for retirement is the biggest financial regret of ‘baby boomers’ (over 55s), with one in four (25%) wishing they had started to put money aside earlier. 

The analysis by Wesleyan was supplemented by further research conducted with its own customers to reveal retirement aspirations. According to a panel of Wesleyan’s customers who said their top three goals in retirement are to stay fit and healthy, travel and to stop work completely. 

Yet despite their aspirations to give up work, more than a quarter of the panel (27%) imagine they will have to take part-time jobs as they transition into full retirement. 

Vicki Wentworth, Chief Customer and Strategy Officer at Wesleyan, said: 

“Ensuring you have enough money for retirement is the most important savings plan you will ever have, which is why it is crucial you talk to experts and learn from those who have already been through it. 

“Our research tells us that those closest to retirement cite failing to save early enough as their biggest financial regret, so it’s imperative more people start saving earlier to avoid a shock in later life. The sooner you start, the less you have to contribute each month, it’s as simple as that.