The UK's over 50s dream of millionaire status for the perfect retirement, with £1,167,300 the sum those in this age group would ideally like to have in the bank to see them through their later years. The aspirational figure has emerged from research carried out by FiftyLife, which has surveyed 2,000 over 50s on their plans for the future, including their hopes for retirement. This sum combined with the full state pension, could result in a very healthy income of over £55,000 a year from the age of 65.
Unsurprisingly, however, the real financial picture for many older Britons is far less rosy, with the average pension pot at £50,000 – enough to produce an annual income of just £2,500 for someone retiring at 65. Combined with the full state pension of £164.35 per week, this equates to a total annual income of £11,046.20 – a shortfall of over £44,000 a year between the dream retirement and reality.
The picture is bleaker still for 15 million Brits who have no pensions savings at all, and will be solely reliant on the state for their income.
How would you spend a £3,000 windfall?
Keen to understand over 50s' financial priorities, FiftyLife also asked respondents how they would spend a £3,000 windfall. Over a quarter (27%) said they would treat themselves to a great holiday. A prudent 33% said they would save the money for a rainy day, while others would opt for home improvements (15%) or treating their family (14%). A handful of respondents would use the money to throw a huge party.
Yet only 3% said they would save the money towards future funeral expenses – perhaps reflecting the fact that 81% of those surveyed still consider themselves as young, and that those surveyed, who ranged from 50 to over 80, 'feel' an average of just 48.
Respondents were also asked when they would like to retire if money were no object, with 59 years and seven months emerging as the perfect age – several years ahead of state pension age, which will rise to 66 for both men and women by 2020.
For those with even more ambitious plans, the dream figure of £1,167,300 could be attainable, argues author and investor Robert I. Tracey from Retirement Investing Today. He plans to retire at 45, having started saving and investing in 2007.
"£1,167,300 is a number close to what I'll have when I retire early in a few months' time. To achieve it I focused on both increasing my earnings, which I found is possible if you put your mind to it, and decreasing my spending. I focused on what genuinely brought value to my family, including sweating the small stuff, as it can quickly become big stuff.
"Taking these steps released significant amounts of cash which could then be invested in a diversified range of assets. Crucially, I only invested in what I understood. The end result will be retirement at age 45 – an age and amount that I never thought would be possible when I started."
How we can help
For those looking to boost their retirement income and help their families, we've compiled a set of easy-to-follow hints and tips on our blog. Ideas include becoming part of the sharing economy, checking benefits entitlements and planning ahead by taking out a life insurance policy.