Saving levels in the UK have hit an all time low following a “perfect storm” of economic uncertainty and a rapidly ageing population, Scottish Widows warns.
A new report by the provider, published today, suggests just 45 per cent of those who “could and should” be preparing financially for old age are saving enough.
This figure is based on the assumption people who are aged 30 or over, who are not retired and are earning at least £10,000 a year should be saving at least 12 per cent of their income or expecting their main retirement income to come from a defined benefit pension.
It is the lowest figure recorded since Widows first published the annual study in 2005.
Scottish Widows head of pensions market development Ian Naismith says: “We are being hit with a triple-whammy of, firstly, continued economic uncertainty making it difficult to save for the long-term; secondly the age of first time buyers is rising as we face troubles getting on the property ladder and thirdly an ageing population.
“These factors combined create a perfect storm for those heading towards retirement.
“As a nation we must either prioritise saving for the future and prepare accordingly, or seriously adjust our outlook for old age.”
The report also found a huge gap between the income people expect to retire on and the amount they are saving.
Widows says the total pension pot for an average saver would be £122,000 in today’s prices, providing an annual pension of £3,860.
With the addition of the state pension the average person’s retirement income would rise to £11,400 – less than half the £25,200 annual income people expect to receive in retirement.