Average 50-year-old ‘needs to double pension pot’ by retirement
The average British 50-year-old has less than half of the retirement savings they will need to guarantee a minimum standard of income when they stop work, new research from MetLife shows.
Its unique study of the finances of 50-year-olds shows they have an average of £54,300 saved in pension funds – but in order to meet pensioners’ minimum annual income standards of £14,400 including State Pension they need around £122,800 by the time they retire.
That leaves a gap of £68,600 to fill – and the gap is wider for 50-year-old women who have an average £38,500 saved compared with £74,200 for men. The gap is just an average – around 41% of 50-year-olds admit the State Pension will be their main source of income in retirement and 26% say they have less than £20,000 saved.
Their saving for retirement is being squeezed by other priorities – the average 50-year-old with a mortgage outstanding is five times more likely to prioritise paying it off, while those with children are 20% more likely to focus on their children’s financial well-being.
MetLife is highlighting the financial pressures faced by the Uncertain Generation – those born between 1961 and 1981 – which it calls U-Gen and has launched an online calculator at financialfitnessatfifty.com which helps show when they can afford to retire.
Many could be in for a shock - despite the financial squeeze research shows the average 50-year-old is planning to retire at 61.5 while homeowners are hoping to pay off their mortgage at 58.5.
Dominic Grinstead, Managing Director of MetLife UK, said: “Around 868,000 people will turn 50 this year – 32,000 more than last year. Someone in the UK turns 50 every 40 seconds but they are far less financially secure than their predecessors. The Uncertain Generation has complex financial needs but are facing unprecedented pressures.
“They accept that they will have to retire later than anticipated, but are still uncertain about exactly how young they will be able to do so. Currently the average 50-year-old is a long way off the pension required to be financially comfortable after work. As a result, retiring before 60 is highly unlikely for most.
“We understand that those in the Uncertain Generation are having to fund their own, longer retirement as well as providing for their children’s education and future – all at a time of great financial uncertainty and economic volatility. And we understand that this is an overwhelming situation, which is why we’re encouraging those U-Genners who are concerned about their pension to seek advice.”
MetLife has launched the U-Gen campaign as part of its focus on delivering more certainty and control in financial planning and is supporting the 12-month campaign with a financial adviser guide, video case studies and a range of business development tools for advisers aimed at helping them support customers.
MetLife provides a range of solutions that will give those in the Uncertain Generation more control of their finances, including capital and income guarantees on retirement and investment plans.