Newspaper article The Journal (Newcastle, England)

Are You Saving Enough to Fund Your Retirement? EXPERTS SAY THAT MOST OF US ARE FALLING WAY SHORT WHEN IT COMES TO SAVING ENOUGH MONEY TO LIVE THE LIVES WE WANT IN OLD AGE. TRICIA PHILLIPS REPORTS

Newspaper article The Journal (Newcastle, England)

Are You Saving Enough to Fund Your Retirement? EXPERTS SAY THAT MOST OF US ARE FALLING WAY SHORT WHEN IT COMES TO SAVING ENOUGH MONEY TO LIVE THE LIVES WE WANT IN OLD AGE. TRICIA PHILLIPS REPORTS

Article excerpt

Byline: TRICIA PHILLIPS

AS THE state pension age moves further off into the distance for most of us, do we really want to rely on the Government to fund us in retirement? Probably not, but how do we know if we are saving enough to see us through a comfortable older age? Research from DEVERE Group suggests that eight out of 10 clients who started seeking financial advice from the firm last year were not saving enough towards their retirement.

Nigel Green, founder and chief executive of DEVERE Group, said: "This is very worrying indeed. In initial meetings with clients we do detailed analyses of their current financial situation.

"We then discuss at what age they would like to retire and how much money they would need to have saved over their working lives in order to achieve this and to live the lifestyle they desire in retirement, which is, typically, a comparable one to the one they enjoy now."

Working out if you are saving enough is a matter of doing the sums on how much you need versus what income you can expect from various sources.

This is based on when you want to retire, the income you currently earn, outgoings when you give up work and the type of lifestyle you want to enjoy in later life.

HOW MUCH SHOULD YOU SAVE? THERE is a basic industry rule of thumb that suggests you should save half your age as a percentage of your salary to enjoy a reasonable lifestyle in retirement.

So, if you are now 25, you should save 12.5% of your gross pay into a pension. If you are 40, it should be around 20%.

However, there is a sting in the tail as the minimum contributions through auto enrolment will at the most increase to 8% in the coming years.

Currently, many workers are contributing just 1% of their salary, topped up by 1% from their boss, so just 2% in total. This is way too low to be building up anywhere near the amount people will need to retire on.

But it isn't just all about pensions. ISAs are a great way of getting into the savings habit, and should also be considered as a top-up to workplace savings and the state pension, or as an alternative for those who don't have access to a workplace pension.

Andrew Tulley, retirement expert at Retirement Advantage, says: "It is always going to be difficult balancing financial priorities, and it is easy to see how retirement can seem a long way off. But hoping to rely on the Government really is going to be a fool's paradise.

"Balancing the live-for-today attitude and hoping for the best for the future is not going to work out for most people.

"Taking control and putting aside a little now for the future not only creates a savings habit but also gives you the best possible chance of financial security in your later life."

Research from pensions firm Prudential shows more than half of people contributing to workplace pensions via auto enrolment say they could afford to save more. …

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