UK pension savers need to save seven times their annual household income by the time they hit 68, in order to maintain their lifestyle in retirement, Fidelity International has found.
The retirement savings guidelines puts the UK saving rates at the lowest in the world in order to maintain current lifestyle, with the United States, Germany and Canada all having to save 10 times their annual income, rising to 12 times annual income for people living in Hong Kong.
According to the guidelines, people in the UK must save 13 per cent of their salary from aged 25 to 68 in order to have adequate savings, which will then be topped up by state pension provisions.
Despite the results, Fidelity International investment director, Maike Currie, believes UK savers still need education in order to prepare for saving.
“Auto-enrolment has had a real impact, with 73 per cent of employees now contributing to a UK pension, and employers have a significant role to play in engaging their workforce.
“However, the onus is still on individuals to make sure they’re saving enough. This is why we have developed these simple rules of thumb to help people to achieve their long term savings goals with a little bit of financial forward planning.”
The guidelines suggest that Brit’s should save one times their annual income by the time they are 30, two times by 40, four times by aged 50 and six times by the time they reach 60.
“Ultimately what the saving goal is doesn’t matter; what does matter is that there is a way of getting there if the right plan is in place. At whatever age someone starts on this journey, a focus on the goals ahead is vital.
“Missing a milestone is not the end of the world, and can be overcome through planning and saving – the best first step is to start.”