LONDON, UNITED KINGDOM — (Marketwire) — 01/21/13 — has produced a retirement income versus savings ladder showing how much an individual needs to save to supplement the proposed pension in order to achieve a range of retirement income levels.
The figures show that to generate the same level of income as the new basic state pension individuals would need to save GBP 210,000. But to achieve an income equivalent to the national minimum wage you need to build an additional pension pot of GBP 130,000. To achieve what the Joseph Rowntree Foundation regards as sufficient to enjoy the minimum standard of living in the UK requires an additional pension pot of GBP 270,000.
Sippdeal marketing director Billy Mackay said: “The proposed flat rate pension makes it easier to plan for retirement and for savers to understand what they need to save, but it doesn-t remove the need to save.
“You would need over GBP 200,000 to fund the basic state pension if it didn-t exist, so this is a significant start. But GBP 144 a week is the equivalent of just GBP 3.84 an hour – far below the minimum wage and well below the living wage.
“If they-re to live comfortably in retirement, savers need to have a clear plan around the significant amount of money that they need to invest into pensions, ISAs and other saving vehicles. This is particularly true of those who are self-employed and those who aren-t eligible for a company pension.”
The Government insists on savers having an income of GBP 20,000pa (including the state pension) before they can opt for flexible drawdown. Mackay added: “This suggests that they think you really need GBP 20,000 a year to be confident of not having to rely on benefits. You need to build an additional pot of GBP 380,000 to achieve that. These are big numbers so savers need to avoid the temptation to bury their head in the sand in the hope that the problem will somehow sort itself. The answer is to save what you can, from as early as you can, as effectively as you can.”
Background:
Below find the figures in our illustration in a table format.
Note: The total funding required figures are based on an annuity rate for someone living in the North West and shows the amount needed for a healthy person looking to secure an adequate income in retirement from their 65 birthday.
About Sippdeal
Sippdeal is a multi award winning provider of administration and investment services for (SIPPs), ISAs and share Dealing Accounts.
As the UK-s first online SIPP provider, Sippdeal has won a number of major awards including “Best SIPP Provider” at the Shares Awards and “Low Cost SIPP Provider of the Year” at the Investors Chronicle Awards.
Contacts:
For more information and case studies of Sippdeal investors
Bulletin PR
Martin Stott
07956 917 978 or 0845 075 0086
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Kirsty Zollinger
Sippdeal 0161 876 2818