According to new figures from financial services company True Potential, savers in the UK have added an average of £2,671.60 towards their pension pots of the last 12 months.
That may sound like a substantial amount, but the truth is that over twenty years of retirement saving, that would only provide £6,011 a year to live on. The average desired income in retirement is more like £23,500 a year, which just shows how massive the shortfall is.
In reality, you would need a fund of approximately £460,000 to draw from to be able to make that happen. This would mean that you would need to put away approximately £10,425 every year, in the UK, to accumulate that pot.
These figures are the result of surveying the habits of over 8,000 savers in the UK. Does it suggest that our hopes and dreams for retirement are unrealistic and unachievable?
Average annual earnings for most British residents are £26,500 according to the most recent Office for National Statistics numbers. By the time tax, rent/mortgage payments, bills, food and general living costs are made, it is simply not possible for anyone to put away £10,425 a year.
So what the research clearly highlights is that planning for the future is of prime importance.
Early in 2014, the National Employment Savings Trust said that £15,000 a year retirement income was the ‘tipping point’ and that those pensioners living above that figure had a “significant” improvement to their lives that those struggling below that line.
However, there are lots of things to consider when working out how much a ‘comfortable’ retirement might cost. It is a very personal question as well. For example, if you already own your home by the time you come to retire, you will need significantly less than someone who has to pay rent in retirement. The sort of lifestyle that you will want to lead will also be a massive factor.
Living as an expat, particularly in South East Asia, the chances are that you have much more capacity in your budget for saving towards your future. You also have greater investment choices and the potential for much larger returns. Not to mention the possibilities of tax-free growth compounded over the years that you remain offshore.
In other words, you can get a massive head start on planning for your future.
Speak to an advisor today, to look at what might be available to you.