The perfect annual income (comfortable retirement amount) during retirement is £17,500, according to a new study, based on workers’ modest expectations of life after the office.
The study suggested that the key requirements for a happy lifestyle in retirement are to be debt-free, run a car and enjoy a two-week holiday abroad each year.
Barclays surveyed more than 2,000 employees who are currently paying into a workplace ‘defined contribution’ pension scheme.
The bank calculated that people would need an annual income of £17,500 in retirement to maintain a decent lifestyle.
To be able to achieve this income, an employee would need to save a pension pot of £350,000, based on current annuity rates.
Under sweeping new rules outlined in March, savers are no longer obliged to buy an annuity, which offers a guaranteed income for life. But savers must still build up a substantial pension pot to fund retirement.
Nearly 80pc of respondents said they expect to work later in life than their parents, while 54pc said they expect to budget during their retirement.
Jonathan Parker of Barclays corporate and employer solutions said: “Our research shows that defined contribution members, especially those among younger generations, see retirement as a general and protracted slow-down and much less of a sudden step change between work and leisure.”
He said: “It is vitally important people fully understand what their financial situation will look like in later life and what they have to do now to ensure they are able to achieve a standard of living they want for retirement.”
Automatic enrolment, where employees pay a percentage of their salary into a pension scheme, will be mandatory for all employers by 2018.
Dr Paul Redmond, director of employability and educational opportunities at the University of Liverpool, who helped with the report, said: “For many employees and particularly those from younger generations, the idea of planning and paying for a pension seems remote, something to be worried about later, if at all.
“From an employer’s perspective the challenge is to cater for what has become a complex multi-generational workforce as, for the first time in industrial history, five generations are often working together in the workplace.”
The report suggested a gradual increase of the automatic enrolment minimum contribution from 8pc to 12pc, as well as greater workplace education, to help people achieve their desired lifestyle.
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