Worrying: Brits underestimate the cost of retirement by £169,000

New research by leading price comparison website, MoneySuperMarket, reveals many people in the UK haven’t even started thinking about saving for when they stop working. Most have no idea how much they need to save to live a comfortable life in the future and worryingly, nearly half are not considering buying life insurance to protect their dependants from debt and provide for their financial needs.

Using consumer research based on 1000 respondents, MoneySuperMarket has built an interactive tool that people can use to see how prepared they are compared to their demographic, with results tailored by the user’s age and gender.

The average Brit needs £370,000 to retire, based on £26,000 a year to live off. However, the survey results revealed some shock findings:

Nearly half (49%) of respondents have no idea how much is in their pension pot
Over a quarter (26%) of respondents don’t have a pension.
On average, respondents estimated they needed £200,915 for their retirement – a 46% underestimation.
67% of respondents do not have life insurance, and only 18% of these plan on purchasing it in the future.

Gender Gap Found in UK Pension Pots

There is a pension gender gap in the UK, with women found to both be less likely than men to have a pension, and also have a more unclear understanding of how much their pension was actually valued at.

Women are less likely to have a pension than men (29% vs 21%).
Women are also less likely to know how much they have in their pension pot (19% vs 32%).
On average, women have £1500 less savings than men.

Over 55s Still Very Unprepared for Retirement

Whilst milennials were shown to be the least knowledgeable, there was also found to be a high lack of knowledge across all age groups, including the over 55s. So far, 3000 people have used the tool to see how prepared they are for retirement, and these were some of the most shocking results:

Even over 55s underestimated the amount the need for retirement by over £145,000.
20% of over 55s are not enrolled in a pension scheme.
Only 1 in 3 respondents over 55 have life insurance.

The study also identifies key regional differences with regard to savings and preparation for life after work.

Despite the high cost of living, Londoners are the biggest savers, with £14,611 saved on average. This is 55% more than those from the West Midlands, who have saved the least on average, despite being most aware of their pension pot amount. Only 35% of East Anglian respondents were aware of the actual amount in their pension pot.

Scottish and Northern Irish respondents are the most prepared for their futures, with the majority (50% of Northern Irish and 55% of Scottish) of respondents revealing that they have life insurance. Overall, respondents from the North (51%) of the UK underestimate the recommended pension pot amount by nearly 10 per cent more than those from the South (42%).