Cost of living for pensioners is expected to soar by nearly 150% by 2050
Research from Royal London shows that the current average monthly expenditure of a retired person, who is not reliant on the state pension, is approximately £1,183 a month. This is set to increase to £2,930 a month by 2050, an increase of 148%. This figure is based on the cost of living and essential items such as housing, food, heating and transport, but does include a few added luxuries.
If the future cost of living does indeed increase at this rate, it would mean that today’s average 35 year old will need to build up a fund of at least £666,000 to retain a standard of living similar to today’s retirees.
Worryingly, the research shows that today’s 35 year olds have a pension pot of only £14,000, well short of the amount required to secure even the monthly cost of £1,715 for essentials in 2050. Unless this age group begin to prioritise their savings and investment plans for retirement, there is a strong chance that they will be living out their retirement in poverty.
Some crucial facts came to light in the report that highlight a ticking time bomb with young people and pensions. Over 54% of the 30-40 years olds surveyed are not saving for retirement because they say they can’t afford to, and a further 10% believe that it’s too early to start contributing towards a pension. Worryingly, 10% say it’s because they don’t know enough about pensions and thought it was now too late to start contributing.
They say the older you are, the wiser you become. Perhaps the younger generations should take note of the following piece of advice from 65-75 year olds to those in their 30’s.
“Start saving as soon as possible”
Interestingly, only 2% would tell a 35 year old to live for today….Food for thought indeed.
Whatever age you are, IEP Financial are experts in Pensions and Investments. For more information on setting up a pension or working with your current pension scheme, give us a call on 01273 208813 or email [email protected]
This article was originally published on Thursday, March 31, 2016 – 12:46
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