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50-year-olds need to double the amount they save
The average 50-year-old has only saved half of what they need to achieve a minimum standard of living in retirement. No wonder financial experts are calling them the 'Uncertain Generation'!
by Michelle McGagh on Jun 15, 2012 at 11:30
The average 50-year-old needs to more than double their pension pot by the time they retire to guarantee an income of £14,000 a year, which is reckoned to be the minimum needed to live on.
Research by insurer MetLife shows the average 50-year-old has just £54,300 saved into their pension, half of what they need to reach a minimum income level of £14,400 as set out by the Joseph Rowntree Foundation as the lowest amount a person needs for a minimum standard of living.
On top of the state pension MetLife calculated that an average 50-year-old would have to save a further £68,600 in order to achieve the £122,800 pension pot they need.
The savings gap that needs to be filled is even wider for women of the same age, who have on average just £38,500 saved, while the average man has £74,200 saved.
Worryingly, 41% of 50-year-olds say the state pension will be their main source of income in retirement, and 26% say they have less than £20,000 saved.
Research by MetLife suggests people in their 50s are not saving enough into their pension because of other financial priorities. They are more likely to pay off their mortgage and 20% of those with children said they are more likely to use their money to enhance their children’s financial wellbeing.
Despite the lack of savings, people in their 50s aim to retire at an average age of 61.5 years, and homeowners are expecting to pay off their mortgage at 58.5.
MetLife UK managing director Dominic Grinstead said those in their 50s were part of 'U-Gen', the Uncertain Generation, who are facing a number of pressures on their finances.
‘Around 868,000 people will turn 50 this year, 32,000 more than last year. Someone in the UK turns 50 every 40 seconds, but they are far less financially secure than their predecessors. The Uncertain Generation has complex financial needs but is facing unprecedented pressures,’ he said.
‘They accept that they will have to retire later than anticipated, but are still uncertain about exactly how young they will be able to do so. Currently the average 50-year-old is a long way off the pension required to be financially comfortable after work. As a result, retiring before 60 is highly unlikely for most.’
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