UK pension savings are higher than those in Europe according to a recent study by Schroders Global, but one IFA believes that those with a target retirement age of 60 may not be saving enough.
In an investor study carried out in 2017, Schroders Global found that on average UK investors are saving 11.3% of their income specifically for retirement.
Savings in the UK are, on average, a lot higher than those of their European counterparts (9.9%) and roughly the same as the global average (11.4%).
However, Antony Barton, IFA at Yorkshire based Robertson Baxter believes that, despite this higher level of saving, those saving for their pension should consider contributing more to their retirement income if they wish to retire at 60.
“There is a strong message from retired investors that they wish they had saved more for their retirement,” said Antony.
“The rate that UK investors are saving, on average 11.3% of their income, does not match with their desire to retire comfortably at age 60 with a comfortable retirement income of 66% of their income.
“In reality, to achieve this, saving rates should increase particularly for those over the age of 30.
“The analysis from Schroders Global indicates that someone starting to save at age 30 is likely to need to save 15% of their income, and anyone above this age should adjust their savings accordingly.”
The level of retirement income a person can expect depends on several factors; the amount contributed, the returns achieved, how the money is invested after retirement and the length of time the money will be withdrawn.
“UK investors, on average, would like to retire at 59 years old, and anticipate that 16% of their income will come from state pensions and 30% from company pensions.
“If a saver contributes 15% of their income, they would require an investment return of 4.3% to achieve a retirement income worth 66% of their income.
“If they contributed 10% of their income, they would need an investment return of 6.2%, which is a higher level than the long term average on equity markets.
“If you are worried about your level of pension contributions, please seek help from an investment professional,” he concluded.