You are here: Home - Retirement - Retirement planning - News -

Brits ‘significantly’ underestimate the cost of living in retirement

0
Written by: Paloma Kubiak
02/07/2018
Brits are ‘in for a shock’ when they retire as many significantly underestimate the cost of living in retirement, a new study warns.

The average non-retired UK person expects living expenses to account for 38% of their annual retirement income, but those already in retirement say living expenses represented 53% of their expenditure.

When it comes to income in retirement, the study by Schroders found that UK adults aged 55 and over expect to need an income equivalent to 66% of their current salary to live comfortably in their later years.

But those already retired said they actually receive less – just 53% of their final salary. And just 52% of these retirees said this is sufficient to live comfortably. Two fifths said they could use a bit more income, while one in 10 said they don’t have enough of an income to live comfortably.

As part of the study – a survey of over 22,000 people globally, including 1,000 from the UK – non-retired people in Europe expect living expenses to account for 35% of their retirement income. But the reality is that they spend closer to 50%.

On a global basis, non-retired people expect to spend 34% on living expenses, compared to the 49% actually spent, according to retirees.

 

Lesley-Ann Morgan, head of retirement at Schroders, said there is a real danger that people globally are underestimating their basic living expenses and the level of income they will need to live comfortably in retirement, particularly in the current environment of low returns and increasing inflation.

“There is no magic wand for savers. To avoid facing challenging financial circumstances on retirement, they need to recognise the need to start saving as much and as early as possible.

“Leaving retirement saving until you are nearing your 50s and 60s is likely to be too late to make up a savings gap,” she said.

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

ISAs: your back-to-basics guide for 2018/19

Here’s everything you need to know to make the most of your unused ISA allowance ahead of the 5 April deadli...

A guide to Sharia savings accounts

A number of Sharia savings products have upped their game in recent months, beating more familiar competitors ...

Five ways to get on the property ladder without the Bank of Mum and Dad

A report suggests the Bank of Mum and Dad is running low on funds. Fortunately, there are other options for st...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Money Tips of the Week

Read previous post:
Tesco and Carrefour tie-up is good news for investors, says analyst

Tesco's strategic partnership with French supermarket giant Carrefour should be "well received" by shareholders, an analyst has said. 

Close