Will You Earn The Minimum Wage In Retirement?
Please note this blog post was published over 12 months ago and so may not include the most up-to-date information, for example where regulation around investing has changed.
When it comes to your retirement, you need to be certain that you are going to have enough money to live a comfortable lifestyle.
There are several factors to consider. What bills will you be paying? How much will you be spending on shopping? How will the occasional big purchase add up? What impact will a holiday here and there have?
The reality is, retirement could end up being more expensive than you first imagined. Some have described it as every single day being a Saturday. While that sounds like fun, you have to remember the potential cost.
That’s why it is so important to ensure you have an ample retirement fund for when you finally reach those years of freedom. Our Savings Gap research has indicated that people may need a retirement income of £23,000 a year to live comfortably.
Unfortunately, our research also indicated that based on actual savings behavior, people are on course to receive just £6,000 a year from their retirement fund. This means that people are facing the prospect of being on less than the minimum wage in retirement.
Think about it like this, if you receive just £6,000 a year from your retirement fund, that works out as just £500 a month to live on. Could you afford to live life as fully as you are used to?
The danger of earning less than a minimum wage in retirement is having to accept a lifestyle that you may not be comfortable with. You may find that you have to work longer to make up for any shortfall.
To solve this Savings Gap, it could be a good idea to start saving or investing more now. You can use our Retirement Calculator to get an idea of what you may need in retirement.
Think about your goal. Set this and keep it in mind, using it as your motivation to build your retirement pot. Start by working out how much you need to save or invest each month, and for how long, to reach the sum you need for a comfortable retirement.