Ninety per cent of people are not saving adequately for their retirement funds

Ninety per cent of people are not saving adequately for their retirement funds, according to an independent financial advisory firm.

A report by deVere Group has shown that nine out of 10 of the working population who have stated seeking financial advice are unprepared for later life.

deVere Group has described the statistics as ‘extremely alarming’. The worrying news has highlighted that people are not saving enough money to support a comparable lifestyle when they retire.

Founder of the deVere Group Nigel Green, said: “There seems to be a certain ‘head in the sand’ mentality when it comes to saving for our mature years. This is very concerning, particularly as we’re living longer, meaning the money we accumulate has to last longer; in the future, it’s likely that governments will not be in a position to support older people like they have done for previous generations; and because of the growing deficits in company pension schemes.”

“Unless there’s a radical shift in the savings culture, too many people are going to reach retirement and find they have to downgrade their lifestyle or continue working longer than they had expected and hoped, due to a lack of funds.”

The Government has this week announced plans to minimise the amount of pension pots lost when people change jobs, by helping workers to take their workplace pension with them throughout their career.

Minister for Pensions Steve Webb said: “Instead of having lots of small pension pots all over the place, we want people to have a “big fat pot” which will buy them a better pension. When people change job, they often leave behind a pension pot which becomes forgotten and which can even attract higher charges once they leave the firm.

“We want to make it the norm that when you move job your pension rights can move with you if you wish. This will reduce the costs of providing pensions and will help people to be much more engaged with their pension savings.”

It is estimated that people on average have eleven jobs over the course of their working lives, which will result in 50 million dormant pension pots by 2050. The Department for Work and Pensions hope that the ‘pot follows member’ system will allow people to move pension pots that have accrued under £10,000 automatically when they change jobs to reduce the amount of funds lost.

The deVere Group financial advisers said that the amount people should be saving is dependent on your age amongst other factors, with the age that people started to save also being important.

The organisation has suggested that people aged between 25 and 34 should be saving between 15 and 25 per cent of their income, those aged 35 to 44 should save 25 to 35 per cent, for the 45 to 54 bracket is rises to 35 to 45 per cent, and those 55 and over need to save considerably more.

Mr Green emphasised that it is never too late to start planning for your retirement, saying: “It is very important to stress that whatever age you are, the time to start saving is now - because the earlier you begin, the easier it will be reach your goals - and also that it is never too late to start saving, as there’s always something that can be done to help you secure financial freedom in retirement.”