Nearly a Third Unsure How Much They Should Save into Their Pension

New research highlights a significant gap in financial planning among individuals saving for retirement. Nearly a third (29%) of people surveyed admitted they don’t know how much they should be saving into their pensions to ensure a comfortable retirement. This alarming statistic, revealed by Hargreaves Lansdown (HL) in a study conducted with Opinium, sheds light on the varying levels of financial awareness across different demographics.

Survey Insights

The survey, encompassing 1,400 individuals, showed diverse perspectives on the optimal percentage of annual salary to allocate toward pensions:

• 21% believe saving 6-10% annually is sufficient.

• 20% think contributions should range between 11-15%.

• A notable 8% feel over 25% of their yearly earnings is necessary to secure retirement comfort.

• However, 29% admitted they had no idea, with uncertainty spiking to 44% among those aged 55 and above, the group closest to retirement age.

Expert Commentary

Helen Morrissey, Head of Analysis at Hargreaves Lansdown, voiced concern over these findings:

"Many of us save into a pension every month, with no real thought as to what we need to get out of it at the end and whether what we are doing is enough. HL’s latest research shows that almost one-third of people have no idea how much they need to save to give them enough to live on in their retirement years."

Morrissey emphasized the critical nature of planning for retirement, particularly for those over 55 who are likely to encounter life changes, such as unexpected health issues, which could disrupt their ability to work.

Why This Matters

For younger individuals (aged 18-34), the uncertainty is less pronounced, with only 19% unsure about savings targets. However, this confidence often stems from time being on their side rather than a solid grasp of financial requirements.

Planning for retirement is not a one-size-fits-all process. As Morrissey notes:
"We all have different ideas for what we want that time to look like. For some, contributions of 8% will give them what they need, while others will have to do more."

Factors like mortgage or rental obligations, lifestyle aspirations, and unexpected life events all play a role in determining the ideal pension contribution.

The Call to Action

To address this gap in financial literacy and preparedness, experts recommend:

• Regular Pension Check-Ins: Regularly review your pension to ensure contributions align with your retirement goals.

• Professional Guidance: Consult financial advisors to create a tailored plan for your circumstances.

• Early Adjustments: Starting earlier provides more flexibility to make smaller, consistent contributions over time.

Take Charge of Your Pension
Understanding your retirement needs doesn’t have to be overwhelming. By taking proactive steps today, you can ensure a comfortable and secure future. Whether you’re starting your first job or nearing retirement, a clear pension plan is essential for peace of mind.

For advice on pension options, transfers, and contributions, arrange a call with an advisor.