Estimates of the amount of money needed for a ‘modest’ retirement can vary by up to £500,000, according to research from Aon.
A ‘modest' living standard in later life was defined by more than 70 trustees and pension managers of defined contribution (DC) schemes, as the middle of three states in retirement between ‘basic' and ‘comfortable'. This included features such as a basic car, holidays in Europe, and high street clothing.
Aon found estimates from industry professionals ranged from £300,000 to £800,000 for what a single member would need to live modestly in retirement.
These findings come ahead of the launch of the Pensions and Lifetime Savings Association's (PLSA) Retirement Living Standards which are expected to be announced at the trade association's annual conference in Manchester later this week. The standards are aiming to put much-needed focus on the issue of what people really need to live comfortably in retirement.
Aon senior DC consultant Karina Klimaszewski said: "The range of answers we received gives a clear illustration of the breadth of opinion on just what figure is needed for retirement. If pension professionals display this disparity in thinking, how easy can it be for scheme members to estimate what their future retirement needs will be?"
She added: "As an industry, helping people to understand their target saving level, their existing provision from employer schemes and their state pension, it's vital that we find better ways both to understand what their retirement needs will be, what they will need to achieve that, and how they can reach an adequate retirement saving that will meet their lifestyle expectations.
"We hope the PLSA's work in this area will be a major contribution to the thinking within the industry on what, after all, is the key question for anyone planning for their retirement."
An Aon survey last year also revealed more than a third of those with DC pensions expect to experience a fall in their living standards in retirement, while 59% believed they were not saving enough for their long-term needs.
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