A recent report has highlighted that many middle aged people are regretful about starting pension plans late in life or worse still, having no retirement plans at all. It’s a fact of life, savings and future planning go out of the window when we have children to feed and a mortgage to pay. It’s ok if you’ve been automatically paying into a company pension for your entire working life. But for those of us who haven’t done that, what can we do?
The good news is that this predicament isn’t the doom and gloom that we are lead to believe. In truth, it could cost under £6 a day to buy some peace of mind. A recent survey conducted by ‘Which’ has looked into what retired people spend and how much we need to save to finance a decent retirement.
In our early years, the majority of our income goes on property and material goods. By the time we get to retirement spending shifts to funding more recreational activities like eating out and holidays. Out of 2,700 people interviewed, the average that couples are spending yearly on basic costs of living is £18,000. A further £8,000 is spent on leisure and recreation. Those who consider themselves to be having a luxury retirement are spending around £39,000 a year.
So how do we get to that magic £26,000? Well if you consider that a basic state pension is worth around £16,500 to a couple per annum, the remaining £9,500 needed to get to a decent retirement level doesn’t seem so hard to find.
In the report, ‘Which’ summarised that if a couple starts saving at the age of 40, they would need to find £338 a month to build a pension pot worth £210,000 by the time they reach 67. If you break that down into affordable chunks, around £12 each a day per couple is quite a small amount to pay to get back on track and get some peace of mind. So starting pension plans late might not be a total disaster.