How much will you need to fund your lifestyle in later life?

How much will you need to fund your lifestyle in later life?

True Potential Investor’s ‘Saving For Retirement: How Much Will You Need?’ quiz is helping future retirees find out how much they could need in retirement. The interactive quiz asks a few questions to provide an estimate of how large their pension pot could need to be to successfully fund their lifestyle in later life.

Quizzes like this are helping to support the growing awareness of pensions in the UK, which has been bolstered in recent times by the growth of auto-enrolment schemes and media coverage.

True Potential Investor also creates an insightful quarterly report, titled Tackling The Savings Gap Consumer Savings and Debt Data. The Q2 2017 report found that last year, 598,000 employers were enrolled into a workplace pension scheme, adding £87.1 billion collectively throughout the 12-month period. With the popularity of personal pensions continuing, it’s clear to see that Britain is certainly more aware of their pension responsibilities.

The Q3 2017 edition of the report raises another interesting issue; is the amount we’re able to contribute to our pensions hindered by our other financial commitments? 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 report’s other findings also make for interesting reading. 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.

£203 was added on average to pension pots during Q3 2017. In contrast, the average amount of debt taken on by UK consumers each month stood at £370 — significantly higher than the amount put towards their pensions.

Purchases that are later regretted are common amongst Brits, the Q3 2017 report found. On average, Brits spend £143 per month on regretted food, clothes, alcohol and other items. 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. 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.

Broken down to a daily average, this £143 works out at £4.70 per day. As the above example shows, investing this amount instead could lead to a comfortable 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 private pension pots.

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