The average earner will need a combined pension pot of around £300,000 to maintain their pre-retirement lifestyle, according to analysis from Aegon.
The figure is based on findings from the government’s auto-enrolment review, published in December 2017, which set out the percentage of earnings that savers should aim for in order to maintain their lifestyle.
According to these rates, an individual on average earnings of £27,000 should be aiming for a retirement income of 67% – or £18,000.
This would require an additional £809 each month, provided through private and workplace pensions, on top of the full state pension, which current annuity rates suggest would cost £301,500.
However, the auto-enrolment review suggests that 12 million people are not saving enough to meet the estimated requirements.
Steve Cameron, pensions director at Aegon, said:
“While automatic enrolment is helping plug the pension gap for employees, many of us face a shortfall which won’t go away on its own.
“The earlier you take steps to put a bit more aside, the better, and a good new year’s resolution would be to ask your employer if they’d be prepared to match any increase you make with an increased employer contribution.”
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