28 June 2016
Back to news homeNew research from NEST, released today to coincide with the NEST Insight conference, reveals that millions of people have unrealistic expectations about their retirement income. The findings show that most people expect their retirement income to be high in relation to their current income, yet most people are not saving enough to match their expectations.
The figures show that:
‘There isn’t a simple answer to how much is ‘enough’ in retirement. We often do this by working out a percentage of each individual’s final earnings. We call this a replacement rate. But our recent work suggests that this can be too much of a blunt instrument. What an individual needs in later life will depend on things like income levels during working life, whether housing costs have to be taken into account, whether there’s potential income from a partner and aspirations for later life. It’s worrying that many consumers seem to have unrealistic expectations about their retirement income. Many are simply not saving enough to match their expectations.’ said Helen Dean, CEO of NEST.
‘Auto enrolment gives people a big helping hand – not only to get into the savings habit but also by boosting their pots with employer contributions and tax relief. However, we need to start thinking about how to help people think about the next steps once they’re in - what are their aspirations and likely needs in retirement and how can saving in a pension help them get there?’ she said.
How much is enough? is one of the key questions to be tackled at the NEST Insight conference this week. The event marks the launch of the new NEST Insight unit, which will work in partnership with other organisations and academics to tackle the big challenges facing the DC generation of savers.