12 Nov

Written by Kathryn Vercillo on November 12, 2010

How much money are you putting away each year for retirement? If you live in the UK and are between the ages of 51 and 65 you need to be putting away on average of £10,300 per year to close the huge pension gap that has become such a big problem in this country. Of course, most people have a lot of trouble socking away that kind of money so it is expected that UK retirees will be forced to live a much more frugal life than they may have once expected.

What is a Pensions Gap?

It is defined as “the difference between the income needed to live comfortably in retirement, and the actual income individuals can currently expect.”

Pension Gap in Different Countries

A media report by Aviva reveals that the UK has the largest pensions gap per person in the whole of Europe. Spain, France, Germany and the Republic of Ireland also have big pensions gaps but not nearly to the extent that the UK is suffering. To put it in perspective, individuals in those countries need to put away between £5,900 (Spain) and £9,700 (Germany) per year to close the pension gap.

Frugal Retirees

MoneyFacts.co.uk reports that retirees may have to live a frugal life because of the fact that saving this much money for retirement may be impossible at this point for people who are already nearing their retiree age. The report stresses the fact that there are a lot of important things to know about when it comes to your pension and that it’s worth it to start working closely with your employer now to make sure that you get the best pension possible.

Younger People Encouraged to Start Saving Now

Starting to save now will clearly make retirement more comfortable. To close the pension gap for themselves, UK twenty year olds need to set aside just £1,300 per year for retirement. UK thirty year olds should put aside £1,800 per year starting this year to close the gap.

Sources: Aviva Media Report and MoneyFacts.co.uk

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