Have you got enough money saved for your retirement?

According to our latest investigation, those looking for a comfortable retirement should be saving £131 a month from the age of 20, and as much as £633 a month if you leave retirement saving until your 50th birthday. So how are your retirement savings shaping up?

For me, retirement seems a long way off. It’ll be at least 30 years (probably more like 35) before I finally hang up my work boots. I find it pretty hard to imagine what my life’s going to be like next year, let alone what 2050 will have in store for me.

The million dollar question is: how much money am I going to need when I retire? And therefore, how much do I need to be saving now?

Saving for retirement

Fortunately, a million dollars isn’t the answer – a survey of Which? members suggests that a couple will need around £26,000 a year for a comfortable retirement, which in today’s money means they’d need a combined pension pot of £210,000, alongside their state pension entitlement.

We found that retired couples needed at least £18,000 to cover the essentials such as, food, utilities, transport and housing costs. This figure rises to £26,000 to cover extras like European holidays and leisure activities.

Assuming I’d saved nothing at all so far, what this investigation has revealed is that I need to be piling a few hundred pounds into my pension every month.

My pension pot isn’t totally empty. Happily, I heeded my dad’s advice when I got my first job and joined the company’s pension scheme. I’ve since moved on from that job and I’ve now got three different pension pots. In my head, I’m thinking I’m well set.

But, could I tell you how much I’ve got saved in them right now? Could I tell you how much I currently pay into my pension each month? I could probably go through some paperwork and find out, but the answer to both is ‘not enough’.

Pensions dashboard

While I’m sure many of you will be on top of your finances, I’m probably not alone in neglecting to appreciate the value of my pensions’ savings. After all, most people under the age of 35 don’t see pension planning as a priority. In general, we all tend to value the present over the future, spending money on pressing events today rather than saving for tomorrow.

Which is why I’m eagerly awaiting the new pensions dashboard. We’ve covered this before – the online dashboard will show all your pensions data in one place – and many of you agree that this is a great idea to help us all plan for the future.

Last week, the first prototype was unveiled and now work starts on making a consumer-facing version that can be used by 2019.

Personally, I’d like the dashboard to reflect how much I’ve saved so far, what it’ll be worth, and a personalised indication of how much more I’d need to save each month to meet my own goals for retirement.

Over the coming months, the different functions and potential uses for a dashboard will be discussed, and we want to make sure it meets the needs and expectations of the people it’s supposed to help.

So, what would you want to see in an online pension dashboard, and how would you use it?

Patrick Taylor says:

19 April 2017

“You confirm your identity using a process like gov.uk/verify which is already offering secure online access to information such as details on your State Pension and tax returns. ”

I hope that Verify is not used as currently it is an absolute nightmare to navigate the system. Which? might usefully do a piece on how many times people have been locked out and had to request new password or re-register.

Given the drive to get everything on-line Which? must take an interest in this aspect of consumers lives. It may also like to consider the aspects of the functionally illiterate etc . Not that I expect Which? to find a solution but to raise it as a looming problem for Govt to sort. Verify has already been a major dog and HMRC refused to use it. If you read the story you will see a tweak has occurred.

” Currently, more than half (54%) of the people who attempt to register on Verify are unable to create a verified user identity – a figure that in the long term is clearly unfit for purpose. ”
computerweekly.com/blog/Computer-Weekly-Editors-Blog/HMRC-ID-vs-Govuk-Verify-whats-the-difference-and-why-it-matters

Faye says:

20 April 2017

Pensions can be useless if the company goes bust. someone i knew years ago had a 1 million retirement pension either something happened to the company or because of government taxes and the value got halved. I’m not bothering to save. I will work until i drop or if i win the lottery! There wont be pensioners when i get to that age. I’m 40. Some people save all their life and pop it before they draw their pension, and who benefits, well the company they saved with. It doesn’t get paid out to their family, which i think it should or i should be used to cover the funeral, because it is the deceased money after all. We should be allowed to put it in a will for it to be shared out. i feel sorry for the younger generation. Hopefully they will have their heads screwed on and save from when they leave school. And another thing if you put in to work place pensions you can draw on it from age 55 but it all has to be taken out by age 75 otherwise you loose the remaining balance. i suppose the company you worked for keeps it.

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John Ward says:

I think your decision not to make any provision for your later years when you might have to give up work is irresponsible, Faye, and I think there is a risk that you might live to regret it. I don’t know what you think you are going to live on.

Most occupational pension schemes include substantial employer contributions so the money in the pot is not entirely the employee’s to use as a legacy. Pensions schemes are like insurance policies and are mutual; they spread the risks and the benefits across a large number of people so that the pension scheme is basically affordable and the eventual pension useful. If the contributor dies while in employment then a death benefit is usually payable so the whole pension pot is not retained by the employer. Many schemes have provision for ongoing survivors’ benefits and many have a lump sum element that can be released immediately to pay for a funeral.

There is the potential for pension scheme closure in the event of company collapse but changes in the legal position have reduced the risk and there is the Pension Protection Fund that provides certain benefits if a company’s defined-benefit pension scheme has to be closed as a result of insolvency. Private pension schemes and life assurance policies are also available. Before dismissing the idea of making some form of pension provision it would probably benefit you to consult an independent adviser.

It’s up to you whether or not to set aside a portion of your income for the future, but if you don’t nobody else will.

Anthony says:

I suppose the dashboard will be handy but I don’t have much need for it. I am also cautious about all my information in one place, especially government controlled.
I have multiple pension pots building but it’s easy to look at each and simple to show them in a spreadsheet.
No doubt I’ll use the dashboard when it comes coz I like that sort of thing, and it should aid others less knowledgeable about their retirement funding.

Lauren Deitz says:

Hi Anthony, have you got any thoughts about the sort of information you’d like to see on the dashboard?

21 April 2017

When I first wrote I did not see the video – as in I did not see anything was meant to be there when I followed your in line link.

The video I now see but it will not run so I have a couple of grainy pictures. I have been to the underlying Vimeo site briefly where they said it could not be found! Perhaps you have a working link to the video???

I can understand the concept but given I cannot see the work so far it seems a bit of a cul-de-sac. Verify is busted and here now infuriating consumers so could Which? look into it.

Louise Percival says:

Information for single people would be helpful. Lots of people choose to be single or find them self in a single situation in mid-life with little or no pension, even after many years of marriage.

User 66219 says:

This comment was removed at the request of the user

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Bryan Sisson says:

24 August 2018

I find it hard to keep myself warm and fed..I am disabled and diabetic with all that goes with the disease.. I had government financial help. But that has now been withdrawn…Saving is a luxury for only the rich!

Ann Cole says:

I haven’t got anything saved for my care, should I need it. My husband passed away in December last year and as he had no savings Social Services paid for most of his care although as he had a private pension etc they took that into account. Apart from Respite for me he was only in a Home for two and a half weeks before he dies. My home will pay for my care.

Val Robertson says:

27 June 2021

I don’t know where Which gets its surveyed members from, I have never been asked, nor can I find out how to take part in a survey.
The ‘Can I afford to Retire’ survey shows that spending in retirement is way more than mine, yet we still have a comfortable life and go on long holidays. Which’s figures could deter many people from having any hope of a decent retirement.
Are the figures just averages? – i.e. one couple may spend £1000 pa on groceries, which another spends £3000, giving an average of £2000, which may not be a typical figure. The figure of £18,000 for essentials is double what my husband and I spend. We just can’t relate to any of Which’s survey results.

Em says:

A well-conducted survey does not use volunteers – that introduces an unnecessary element of bias.

However, I agree that Which? presentation of the results leaves much to the imagination. Are these figures arithmetic means or modes? What are the quartiles? It’s a pretty pointless waste of effort (other than to generate sensationalist headlines) if they don’t publish the raw data or more metrics to see where and by how far each of us deviates from these benchmark figures.

I am pleased that you have found a way to control your essentials expenditure to below £10,000 per year. I presume you must own your own house? And how do you as a couple eat a healthy balanced diet for less than £10 per day? I can’t – or don’t – wish to eat those kinds of foods or spend all day growing and preparing what I can raise myself. It may well be that in future you cannot live so cheaply, as health issues may affect your own cost of living. Averages hide the reality for people at both extremes.

The trouble is that not everyone is as careful as you. Setting a low expectation for what is required in retirement is more likely to prevent people from having a decent retirement, rather than aiming for what the “average” couple are reported to spend. Even then, mathematically we can expect 50% of retirees to be less than satisfied with their lot, even if they reach the suggested income figures.

No one can predict the future, but the cost of food is likely to increase by more than inflation. Food is unusually cheap in the UK compared to other Western economies. Cheap clothes and household items has lived off the back of low labour costs in Asia. That is likely to come to an end as those countries’ labour costs start to soar.

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