July 19, 2007 / 6:36 AM / 13 years ago

Young people underestimating retirement needs

Young people underestimate the amount of money they will need for a comfortable retirement by almost a quarter of a million pounds, research shows. REUTERS

LONDON (Reuters) - Young people underestimate the amount of money they will need for a comfortable retirement by almost a quarter of a million pounds, research shows.

Nearly half of people in their 20s and 30s (45 percent) have no idea how much they should be saving for their retirement, according to research by execution-only stockbroker Selftrade.

They estimate they will need a lump sum of 262,456 pounds to see them through retirement — a far cry from the 500,000 pounds needed to receive an annual pension of 25,000 pounds, the average annual income among British workers.

The survey also shows that a quarter of those in their 50s have no idea how much they should be saving for retirement.

Neil Jamieson, retail marketing and business development director at Selftrade, said: “Our findings reveal a worrying lack of understanding about how much people should be saving for their future retirement.

“A 30-year-old with no pension provision wanting to retire at 65 with a lump sum of 500,000 pounds would need to be saving approximately 450 pounds per month.

“The message is simple: start saving as much as possible now.”

The findings come at a time when the government plans to reform the pension system, increasing the age at which the state pension is payable and compelling people to save for their own retirement through “personal accounts”.

YouGov surveyed more than 2,000 people for the poll.

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