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Mind the £16,000 gap: Brits walking into retirement unprepared

The average Briton is at risk of receiving just a quarter of the annual income they want in retirement due to a failure to save enough throughout their working lives, according to research by Wesleyan*.

Although they expect to need a retirement income of £22,596 a year to live comfortably in retirement, people are, on average, currently saving enough to receive just £6,279 a year once they finish work - a shortfall of more than £16,000.

New research by the specialist financial mutual found people are saving an average of £199 a month, with more than half (58%) admitting they don't know how much to save for retirement at all. The average age for people to start saving above their basic workplace pension is 32-years-old.

However, people who do delay topping up their pension until that age will actually need to save £716 a month, or more than £8,500 a year, to achieve their retirement income ambitions.

This late start also means people are failing to learn from the experience of previous generations. Wesleyan's research also showed not saving early enough for retirement is the biggest financial regret of 'baby boomers' (over 55s), with one in four (25%) wishing they had started to put money aside earlier.

Vicki Wentworth, Chief Customer and Strategy Officer at Wesleyan, said: "Ensuring you have enough money for retirement is the most important savings plan you will ever have, which is why it is crucial you talk to experts and learn from those who have already been through it.

"Our research tells us that those closest to retirement cite failing to save early enough as their biggest financial regret, so it's imperative more people start saving earlier to avoid a shock in later life. The sooner you start, the less you have to contribute each month, it's as simple as that."

The analysis by Wesleyan was supplemented by further research conducted with its own customers to reveal retirement aspirations**. According to a panel of Wesleyan's customers who said their top three goals in retirement are to stay fit and healthy, travel and to stop work completely.

Yet despite their aspirations to give up work, more than a quarter of the panel (27%) imagine they will have to take part-time jobs as they transition into full retirement.

Wesleyan provides specialist financial advice and services to doctors, dentists, lawyers and teachers.

* Research based on a survey of 1,015 UK adults by Censuswide on behalf of Wesleyan, conducted in February 2016

** Additional research is based on a panel of 118 of Wesleyan’s customers, conducted in July 2016

'WESLEYAN’ is a trading name of the Wesleyan Group of companies.

Wesleyan Assurance Society and Wesleyan Bank Ltd are authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Wesleyan Financial Services Ltd, Wesleyan Unit Trust Managers Ltd, Practice Plan Ltd and DPAS Ltd are authorised and regulated by the Financial Conduct Authority.  Advice about investments, insurance and mortgages is provided by Wesleyan Financial Services Ltd.

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© 2018 Wesleyan Assurance Society