By analysing official data, the company has worked out the pension pot required to bridge the gap to provide two-thirds salary, which according to new research, is the average ideal retirement income.
The gap is £5,954 a year for the average retiree, which would require a pension pot in the region of £100,000 using an annuity, or £200,000 if you want your income to rise with inflation and provide for your spouse. These figures do not include people taking any tax-free cash from their pension, so in reality the pension pot required is likely to be larger.
Andrew Tully, Pensions Technical Director, MGM Advantage commented:
"These figures show the true scale of the problem facing people approaching retirement. There is a chasm between savings and the ‘ideal’ retirement income, which should serve as a wake-up call for many people.
"The scale of the challenge becomes even scarier if want your retirement income to keep pace with the cost of living and provide for your spouse. There are options for people who might have left saving for retirement too late, for example you could consider delaying retirement, continue to work part-time, use equity release or even downsize your home.
"The recent changes brought about by the Budget potentially provide more choice for people looking to generate a retirement income. But you still need a sizable pension pot or other savings to draw on to provide a sustainable income. Seeking professional financial advice can make a big difference to the value of the retirement income you could get."
