How much could you need for retirement?

Thanks to the success of auto-enrolment schemes, growing media coverage and raised pension awareness, UK citizens now know better than to push their pension to the back of their minds.

A new quiz created by True Potential Investor is helping Brits better understand how much they could need to support themselves financially in retirement. It asks a series of questions to establish an estimate of what you could need based on the lifestyle you want to live. You can take the Saving For Retirement: How Much Will You Need? quiz on True Potential Investor’s website today.

In addition to the quiz, True Potential Investor creates a quarterly Tackling The Savings Gap Consumer Savings and Debt Data report, which has produced some interesting findings over the years. The Q2 2017 report found that last year, 598,000 employers were enrolled into a workplace pension scheme. Collectively, they contributed £87.1 billion during the period. With the popularity of personal pensions continuing, it’s clear to see that Britain is certainly more aware of its pension responsibilities.

Other financial commitments could be impacting our pension contributions, the Q3 2017 report has found. 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%).

The above figures should be considered in relation to the report’s other 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.

Those who did contribute to a pension during Q3 2017 added an average of £203, the report found. In contrast, the average amount of debt taken on by UK consumers each month stood at £370 — significantly higher than the amount put into their personal pension accounts.

Each month in Q3 2017, Brits were guilty of spending £143 on purchases of food, clothing, alcohol, and other items that they would later regret. 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, according to the Q3 2017 report. 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 total regretted spend works out at a daily expense of £4.70. As the above example shows, investing this amount instead could lead to a good start towards your pension pot in 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 pension pots.