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Friday 21st of January 2011
June 21, 2009    

Comfortable retirement means working until age of 77

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by Kay Murchie
Comfortable retirement means working until age of 77

New research has unveiled that in order to live a comfortable retirement, Britons may find themselves working until they are 77 years of age.

According to fund management group, Fidelity International, those depending on company pensions, linked to stock market growth, will need to top up their pension considerably if they wish to retire at the traditional age of 65.

The average UK annual salary is just over £25,000 and workers who want to retire on two thirds of their final salary but rely solely on their current employer contributions, at an average of £140 will have to work until they are aged 77, assuming average stock market performance and 40 years of contributions.

For average salary earners, this means topping up with £173.47 of their own cash each month.

Julian Webb, of Fidelity International, explains: “With fewer people in final salary pension schemes, more and more have to make big decisions about their retirement saving yet they don’t have to work until they drop.”

“They can choose to build up a pension pot large enough to provide a relatively comfortable income in retirement. According to our analysis, a young worker on the average wage, whose employer puts in the average amount, only needs to find an extra 8% of salary if they want to retire at 65.”

A recent survey, commissioned by the BBC, revealed that saving for a pension is not a top priority for many UK adults.

The report revealed that half of adults in the UK aged between 20 and 60 are not putting anything towards a pension with the situation being worst for those under the age of 30.

In a bid to encourage Brits to save towards a pension, the Government is to introduce Personal Accounts in 2012 which will be a state-sponsored pension arrangement.

Employees will be enrolled automatically, contributing 4% of their salary. The employer will pay 3% and a further 1% will come from tax relief.

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