Leading consumer advice magazine Which? has released new research which suggests that you should be saving £130 a month over a 40 year period to ensure yourself a comfortable retirement.
Which? magazine conducted a survey and found that retired couples need £18,000 a year to be able to cover normal expenditures. These typical outgoings include food, utility bills, transport and housing costs, however if you add a few extras – for example an annual holiday to Europe, a few drinks in the pub on the weekend and the occasional leisure activity – then the annual expenditure can grow to £26,000 or more.
Which? worked out that to enjoy an annual income of £26,000 during retirement, a couple would require a pension fund of £210,000, along with the current flat-rate State Pension of £155 a week. Based on the current retirement age of 67, a couple aged 20 need to be saving £131 per month to attain their pension fund target.
Putting off saving for retirement by 10 years means that they would need to start saving £198 a month. If they wait until they are 40, then they will need to be saving £338 a month between them to have any hope of saving enough for that £26,000 a year income target. And anyone who doesn’t start saving for retirement until they are 50 are going to have to find an extra £635 a month to put away to be able to enjoy a decent retirement.
Gareth Shaw, at Which? said: “When it comes to saving for your retirement: start early and save often. Being a part of your company pension scheme is a good start, but, depending on how much you contribute, you could well need to save a little more to have the lifestyle you want in retirement.”
Discretionary Spending of Retired Households
A separate survey conducted by a leading financial planning firm indicated that a typical retired couple will spend £26,500 per year until they reach 75. The report, which looked at Family Spending data from the Office of National Statistics (ONS), discovered that eating out at restaurants and getting takeaways were typically the two largest expenses among the retired, at almost £2,000 a year. Retired couples also spend a similar amount on holidays each year and alnmost £650 a year on alcohol.
“During the course of their retirement, an average retired household will spend £104,000 on enjoying themselves, with £42,000 going on holidays, £38,000 on entertainment and £24,000 on restaurants; a third of their spending goes to keeping a roof over their heads. For the wealthiest 25%, roughly a quarter is spent on housing at £194,000, with £184,000 of tehir spending on having fun, of which an amazing £74,000 will be on holidays,” the report claimed.
For the wealthiest group, which accounts for one in 16 households, they can count on one million pounds of expenditure during the length of their retirement. Their £410,000 which will be spent on entertainment, holidays, restaurants and cars roughly equals the average retired household’s entire lifetime budget.”
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