A report out this week, by the National Employment Savings Trust (nest) states that a pension income of £15,000 a year will make you feel more comfortable in retirement.
Apparently those with less than £15,000 found their standard of living falling whereas those with a household income of between £15,000 and £20,000 were able to comfortably afford to pay their bills and cost of living and had disposable income left for the fun things in life.
Surely the basis for a happy retirement is relative to your earning potential when employed though? Would someone who earned £30,000 a year really have the same requirements as someone who earned £80,000 or more?
Wouldn’t a better assumption be to base a happy retirement on a percentage of what you earned, for example 50% to 75% rather than a magic number of £15,000?
What is fascinating and a real eye opener is the report states that if a 30 year old worker swapped one take away meal each week for a home cooked meal and instead invested the £12 they would have spent into a pension fund; it could amass to a staggering £63,000. And don’t forget, under the government’s new pension rules you would have greater flexibility to do what you want with the £63,000 you saved by cutting out on the Friday night curry, chinese or good old fish and chips.
The study also found that a 22 year old contributing the minimum to a work place pension could double the amount they would receive from their state pension, currently around £7,500. This could see them move into the “happy retirement” category achieving the magic £15,000 a year pension income.
Of course like any other report, this is merely a snapshot at this moment in time and only by carrying out the same survey over time can a trend develop, offering a more meaningful barometer of how people feel about retirement savings.
With all this talk of money though it’s worth noting that the Aviva Autumn Real Retirement Report last year revealed that having sufficient money to live comfortably was actually second in priority when it comes to being happy in retirement with ‘good health’ taking the crown.
Is your retirement a happy one? We’d love to hear your thoughts on what makes a rosy retirement so why not get in touch.