Around 70% of working age individuals who sought financial advice from independent financial advisory deVere Group were not adequately saving for their retirement, a company study found.
Nigel Green, the chief executive and founder of deVere Group, with more than 80,000 clients and $12 bln under advisement, said, this is an “alarmingly high percentage”.
“Seven out of 10 of all the new clients we took on as a firm last year were not saving enough in order to be able to have a comparable lifestyle in retirement,” he said.
“When we initially meet with new clients, we do detailed studies of their current financial situation. Then we discuss what age they would like to retire and how much money they would need to have saved over their working lives in order to achieve this.
“This year, only about 30% were saving enough to be able to make their own long-term financial objectives a reality and having enough money to last throughout their retirement.”
Green said that the high number of individuals not having accumulated enough for their retirement is concerning for many reasons because people are living longer, meaning the money saved throughout their working lives has to last longer.
“In the future, it’s unlikely that governments will be in a position to support older people like they have done for previous generations; plus, many company pension schemes have ballooning deficits.
“Also, it might not be possible to work longer if necessary due to ill health, lack of career opportunities, or because you need to look after sick or elderly relatives. The decision might not be up to you in the end.”
Bearing this in mind, how much income should we be putting aside for retirement?
Green said that will depend on age and when one started saving, among other factors.
Start saving from age 25-34
In general terms, deVere Group, which has helped tens of thousands of savers get on track with their retirement planning, suggests that people aged between 25 and 34 should be saving between 15% and 20% of their income.
For those between 35 and 44, this should increase to 20-30%, for the 45 to 54 bracket it goes to 30-40%, and those 55 and over would need to save a considerable amount more.
“Of course, this all depends on the individual and their personal and professional circumstances,” said Green.
“Whatever stage you are at in your working lives, the time to start saving is now. The earlier you begin, the easier it will be to reach your long-term goals.
“And it’s never too late to start saving for your retirement.”