How much money will you be seeing in retirement? That entirely depends on how much and how soon you start saving towards your pension.
Almost two-fifths of workers under the age of 30 are now saving adequately for retirement, according to research from Scottish Widows.
The report measures the number of people putting more than 12% of their income towards their pension, which Scottish Widows recommends as a minimum for adequate savings.
For those aged between 22 and 29, the number of people saving at least this amount increased sharply from 30% in 2017 to 39% in 2018. This is likely down to the fact that all firms were legally required to auto-enroll all of their staff into a workplace pension by October 2017.
Across all age groups, 55% of UK workers are saving adequately for retirement, however, since the coronavirus pandemic started in March 2020, 16% of workers have admitted that they are planning to reduce the amount they save into pensions due to the increased pressure for short term needs.
Robert Cochran, retirement expert at Scottish Widows said:
“Auto-enrolment has been a great success and the increase in minimum contributions should mean more people have valuable pension funds to live off as they approach later life.”
However, the research also showed that more could be done to include younger people in workplace pensions.
More than a fifth (21%) of under-30s are not saving anything at all for retirement, with a further 20% saving ‘seriously less’ than the recommended amount.
The sooner people start saving, the more money they can save for their pension. The government has already proposed to lower the minimum age for auto-enrolment from 22 to 18, which could bring an estimated 900,000 people into retirement saving.
Scottish Widows say that the current threshold also poses an unfair barrier to lower paid workers as well as people with multiple jobs.
Their ability to adequately prepare for retirement is reduced and Scottish Widows are calling for the threshold to be scrapped entirely as without any thresholds, it could result in a further £90 million being paid from employers.
They also recommend introducing pensions online, making saving towards a pension better targeted towards younger people as four-fifths of young people manage their money online through an online banking app.
Saving towards your pension entirely depends on your own circumstances, which is why we discuss your pension savings on a personal level and offer the relevant advice for you.
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