Pensions savings of over 55s not adequate to fund future

Posted on December 3rd, 2010 | Categories - Pensions

Pension savings are insufficient for over 55s reaching retirement.

Retirement capital saved by the babyboomer generation will not be big enough to fund their future lifestyle.

Over 55s have not saved enough money to fund a comfortable retirement, according to research carried out by Aviva Insurance. The study revealed that more than half of the respondents over the age of 55, earning a salary between £20,000 and £30,000, have saved under £30,000 for their future – this works out at just £165 a month.

Clive Bolton, the ‘at retirement’ director for Aviva, said: “Babyboomers have enjoyed rising house prices and final salary pension schemes, but unfortunately many may still struggle to fund the retirement lifestyle they desire. People should think about how they want to spend their days, and how much this will cost”.

He added: “This research also opens up an interesting debate around who should fund retirement. There may be an expectation for younger generations to foot the bill in one way or another”.

British adults spending their retirement in other countries have been warned to look at their options too. Danny Cox, financial adviser at Hargreaves Lansdown, said: “Expats should think ahead to the lifestyle they aspire to, and the income which will support this lifestyle. This will set a target to aim for. In most cases, expats cannot contribute to either an individual savings account (Isa) or UK pension, so should consider what tax efficient products are available in their own jurisdiction”.

Other financial specialists explained that expats need to consider where they want to spend their twilight years and how the tax system in their chosen location will affect their savings.

Christopher Wicks, director of Bridgewater Financial Services Limited, said: “For expats, pre-planning is very important. For example while UK pensions provide lump sums on retirement which are ‘tax free’ in the UK, this may not apply if the benefits are taken after the expat has retired to say, Spain”.