While final salary or defined benefit pensions provide a steady income throughout later life, workers saving into defined contribution (DC) pension plans should by now be painfully aware that the risk of saving enough for their future retirement rests on them. In short, we need to to be realistic about money milestones.
Will we really need to hit that £1m target?
Since 2015, pension freedoms have allowed more income flexibility in retirement and there is growing evidence that this has changed our attitudes towards when we stop work — or if we will at all. Now the answer to whether £1 million is enough depends on your retirement aspirations.
The FT paints some scenarios. For example:
The Pensions and Lifetime Savings Association this month put together a set of three retirement living standards — basic, moderate and comfortable — based on research by Loughborough University. It hopes these will resonate with pension savers in the same way that being told to eat “five a day” encouraged fruit and vegetable consumption. If you want a “comfortable lifestyle” that allows you to be spontaneous with your money and have two foreign holidays a year, as a single person you’ll need to generate an income of £33,000 a year.
The lump sum needed for that?... £1.1m.
Let us remove the stress of money management and maximise your savings, pensions or investments. Get in touch with our team today for an initial, no-expense consultation.GET IN TOUCH