Keeping up with the Beckhams is a recipe for poverty

People are living for today at the expense of tomorrow with payments on designer goods, cosmetic surgery and alcohol dwarfing the amount of money people set aside for their old age.

A Fidelity survey found that 45% of people with no savings say they cannot afford to save for retirement yet an aggregate £1.8m is spent a day on cosmetic surgery and each year the average household pays out £769 on alcohol, £1,908 on restaurants and hotels, £1,180 on clothes and footwear, and £3,542 on debt interest payments.

This contrasts starkly with the amount of money people save for later in life: a 30 year old man puts away an average of just over £60 in his company pension each month. If he hopes to retire at 65 this pot of money could be as little as £126,217.

However, rising life expectancy means a 30 year old man now has more chance of living to 100 than dying before 65. If he hopes to fund a celebrity lifestyle, the annual income generated by his own pension contributions will be just £5,841, and it is likely he will be disappointed.

Simon Fraser, President of Institutional Business at Fidelity International Limited says, “It all comes down to choices: live for the now and cope with old age poverty when it hits or make a few lifestyle tweaks based on the possibility of living until we are 100. Purchases of designer brand watches recently exceeded Maxi ISAs and it seems many are choosing to emulate the lifestyle of rich celebrities like David and Victoria Beckham even though we won’t be able to retire like them.”

Individuals can determine their ‘retirement number’, the amount of money they must amass in order to fund a comfortable retirement, using MyPlan, Fidelity’s free and simple calculator, available at rewritingretirement.com.