18% of people have adequate pension pot to retire ‘comfortably’
The average pension pot amounts to £42,651, according to a survey conducted by finder.com, the personal finance comparison site.
When only accounting for non-retirees, the figure is lower, as they have £33,809 saved on average.
Experts have recommended that someone retiring at 67 should have a minimum of £237,000 saved in order to retire comfortably, meaning that the average person in Britain has a mere 18% of this amount.
20% of the population have no form of private or workplace pension, while 18% have a workplace pension but no private pension.
Zoe Stabler, Investment Writer at the personal finance comparison site, finder.com, said: “The pandemic has been extremely tough for Brits in many ways, with a lot of people having to take unprecedented steps in order to stay afloat financially. It is understandable that some Brits have reduced, or paused, payments in order to direct money to more immediate priorities.”
Stabler also drew attention of the benefits of compound interest when accruing money over an extended period of time.
“However, if you are someone who has had to do this, it is vital that you look at replacing this money or at least starting to pay into your pension again. The power of compound interest means that what you pay in now could be a life changing amount if you’re able to leave it for decades. As an example, £10,000 paid in now, earning an interest rate of 5% per year, would be worth £25,330 in 20 years, £41,259 in 30 years and £67,207 in 40 years**,” said Stabler.
“Also, if you opted out of your workplace pension in order to save money during the pandemic, you should look to rejoin it as soon as you can. If you contribute 5% of your salary each month towards it, your employer is obliged to pay a minimum of 3% on top of this, which is effectively free money topping up your pension!”
The state pension could rise by up to 8% next year, according to forecasters.
