Men Less Prepared for Retirement than Women

FUTURE PROOF: Women are more modest in their pension requirements - and more fastidious about retirement planning, although too many have it all in cash

Emma Wall 8 July, 2014 | 1:33PM
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How much retirement income do you think you need for a comfortable retirement? Young professionals are more modest than you might expect when it comes to a pension income, but their retirement planning still falls way short of requirement.

The average 25-34 year old would like an annual income of £30,000 a year according to the BlackRock Global Investor Pulse survey, estimating that they will need £149,000 to achieve this. But their expectations are far too optimistic, falling almost £500,000 short.

Within the age group, it is young men who are most out of touch with retirement reality. The average 25-34 year old male would like a pension income of £32,000 and considers £168,500 to be sufficient to provide that. In fact, according to calculations by BlackRock they would need an extra £456,000.

Women of a similar age are aiming for a retirement income of £29,000 and estimate they would need a retirement pot of £142,000, when in fact they need £555,600 – a shortfall of £413,600.

Both sexes are prioritising other financial aims, with two thirds failing to save for retirement at all. The BlackRock survey revealed that ahead of saving for retirement, young professionals were concerned with paying off debts, growing their wealth, saving for a deposit for a new home, paying off a mortgage and financing their children’s education.

Auto-enrolment into workplace pension schemes will go some way to plug this gap, with the scheme enrolling 3.6 million new pension savers so far.

This month, 10,700 employers are due to start auto-enrolling their staff into a pension as the scheme hits the biggest staging date so far.

“We are now hitting the peak in terms of auto-enrolment activity, and so far, so good. However many auto-enrolment schemes will probably have to be adjusted or re-written to accommodate the new pension rules, including the pension freedom announced in the Budget, and the ban on commission payments to advisers,” said Laith Khalaf, of stockbroker Hargreaves Lansdown last week.

“Much of the initial concern over auto-enrolment compliance was focussed on smaller companies, who have only just started to auto-enrol. Any flies in the ointment may therefore only start appearing from here on in.”

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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About Author

Emma Wall  is former Senior International Editor for Morningstar