The average 30-year-old must put away a huge £824 a month if they want to retire at 65 with the recommended level of pension income, estimates have found according to a Yahoo article report Harris & Co chartered accountants Northampton, the specialist small business accountants.
Starting the savings just one year later at 31 would increase the payments to £887 a month, said the deVere Group, which did the calculations.
The alarming figures equate to half the take-home pay of Britons aged between 20 and 29 or a third of the earnings of 30-somethings, according to the most recent data from the Office for National Statistics (ONS).
It comes after the ONS revealed that the number of people paying into an occupational pension has dropped to a 60-year low. Only 35% of men and 32% of women under the age of 65 paid into a private pension during 2011/12.
“Even those who are paying in are not contributing nearly enough,” said deVere Group’s chief executive Nigel Green.
The sums are based on a person with the UK’s average salary of £26,500, retiring at 65 with a pension income of 75% of their pre-retirement earnings. It assumes no current savings, annual inflation of 3%, as well as pre-retirement investment returns of 5%, and post-retirement investment returns of a more conservative 3%.
“A 40 or 50-year-old under the same conditions, would to need save significantly more than this in order to reach the same outcome,” added Green.