People 'not saving enough for retirement'

People 'not saving enough for retirement'

Rising costs of living will eat into people's pension pots more than expected, putting them at risk of insufficient income in later life, financial adviser, Jan Kinghorn of Investment Solutions has said.

Kinghorn said: 'Not only do people need to save more, but they need to carefully budget their retirement income. While most employed people have some expectation that their income has the potential to rise in the future and budget accordingly, retirees are asked to guess what level they need their income to be for the rest of their lives.'

She said it is sensible for people to get advice about how to cover their essential costs; although there is no compulsion to buy an annuity after April 2015, the guaranteed income could provide a cost effective way for some people to protect their income.

Mrs Kinghorn pointed to research conducted among 1,500 people aged 40 to 70, conducted by Partnership Assurance. Based on their expectations, Partnership found that, to meet their costs while enjoying some discretionary expenditure, retired people needed a take home income of £14,631 a year. This is £1,625 above the typical UK pension income (£13,006) and suggests that many may need to cut back in order to meet regular bills.

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