How much will you need to retire?
For many people retirement is something that they would rather not think about, either because they do not have the money to put towards their retirement fund in the current financial climate where households are struggling to make ends meet due to higher bills and living costs, or because they are relatively young and feel that retirement is a long way off so they can think about it later.
However, the cost of a comfortable retirement could be far higher than many people imagine, according to a recent report. The report, which comes from Life Trust Insurance, is the Cost of Retirement Report, and the figures show that households will need a small fortune to retire comfortably. In fact, according to the report the average cost of retirement for the typical household is around £413,000. The report claims that the reasons for the huge costs for retirement include soaring living costs and inflation, as well as increased life expectancy.
The report also goes on to state that a person that is living alone will still need a hefty £326,700 to retire comfortably. This is daunting news for the many people that put very little or nothing into a retirement fund for the future, particularly if they are in their forties and fifties and have less time to work towards saving towards their retirement. However, with household finances so strained at present many will find it hard to put extra money into retirement, with many even struggling to keep up with their existing financial commitments.
An official from Life Trust said: ‘It has never been more necessary to understand the true cost of modern retirement. People are living longer, healthier lives. This is great news but only if people have the finances in place to really enjoy their post-career years. The combination of rising life expectancy and the impact of inflation over time can have huge financial implications.’
Over the years life expectancy has increased, and this has added to the financial strains for those going into retirement, as they have to budget for a longer period. In fact, life expectancy at present stands at eighty five years for a man and eighty five years for a woman. However, industry officials state that these figures are set to rise further, so life expectancy could continue to increase, which would add to the amount of money that people will need when it comes to retirement.
One Independent Financial Advisor said: ‘The single most important fact in financial planning is our date of death and unfortunately it is virtually impossible to predict this with any degree of accuracy. This research makes a lot of assumptions to arrive at these numbers. People are not average – so planning for income needs in retirement needs to take individual circumstances and attitudes into concern.’
He added: ‘The risk with this sort of research is that it will scare people off the subject of retirement planning. The numbers quoted, whilst possibly accurate in different circumstances, are wildly unrealistic for most people. Increasing longevity and rising price inflation, particularly in older age, are important considerations for anyone approaching retirement planning these days, but affordability is another important issue to consider.’
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i own our property and we have savings of £250000 plus oap pensions and a small private pension can i retire without concerns