Stagnant wages and rising costs of living are set to wreak havoc on those saving for retirement, according to a new study. This means an average earner in their 30s is now on track to see their pot shrink by £15,000 when they retire.
Scottish Widows showed mounting financial pressures are worrying Britons, many of whom are hoping to cut back on spending.
However, concerns are also felt in retirement for the British, according to the report’s findings.
Over the past few decades, research has shown that pension contribution rates in the UK lag considerably behind their European counterparts.
For the average saver, a joint employee-employer contribution rate of 8% may not be sufficient for a decent standard of living in retirement.
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By extending that to two years, savers could miss out on a precious £2,100.
Pete Glancy, policy manager at Scottish Widows, said: “We face a myriad of problems and there are no easy solutions.
“Unfortunately, it is understandable that households are forced to make difficult choices in their budget, but it is important that they do so while considering their finances for the longer term.
“Having a decent employer or personal pension in place is one of the best ways to plan for your future financial well-being.
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More than 15% of people aged 50-59 said they wanted to hold the majority of their savings in cash, with the figure rising to 29% for those already retired.
As the distance to retirement gets shorter, many people will want to reduce their risk to avoid missing out.
However, Scottish Widows has warned that in times of high inflation, holding larger proportions of cash can be risky and jeopardize investments as their value will remain the same or decline.
Before making important decisions, Britons are generally encouraged to seek financial advice for personalized retirement assistance.
Others can opt for the free government-backed service PensionWise, which offers options on what to do with their pension.