A fifth of workers failing to save for retirement

7 June 2011 8:46 am | By Chris Salih

A fifth of people are failing to make any provision at all for their retirement, a survey by Scottish Widows has found.

The report, which covered 5,200 UK adults, also found that 49 per cent of adults are failing to do so adequately save for retirement despite three quarters stating that they understand the need to take personal responsibility for their future.

The Scottish Widows pension index, which looks at those between 30 years old and state pension age and earn more than £10,000 a year, says that while 51 per cent are making enough provision for retirement, that figure slumps to 25 per cent when those with a final salary pension are excluded.

The report also found that people want an average of £24,300 a year in retirement to live comfortably, a drop from the £27,900 target before the recession in 2009.

Respondents claim they can now set aside an additional £97.10 a month on average for the long-term in 2011.

Scottish Widows head of pension market development Ian Naismith says: “”Put simply, people need to save an extra £58 per month on average to prepare adequately for retirement and make up the shortfall we are seeing currently. That is roughly the cost of a cup of coffee every day.  Even though for many this is realistic, and is in under the average £97.10 per month people say they can afford, we appreciate the difficulty in setting aside extra money.

“It’s about breaking through that inertia. And for some the amount that needs to be saved will be higher but it’s about taking small steps, getting on to the savings ladder and, more importantly, staying on it. Much higher saving levels are needed to get towards the average £24,300 a year people aspire to.  The message is that everyone should be putting aside as much as they can afford for their retirement.” 

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