There are many troubles facing the UK at this time, especially as Brexit is slowly reaching its maturity date come March 2019 which would have a huge impact on the socio-economic dynamics of the country.
The most at-risk are those who have reached the retirement age and depend upon the state to provide them adequate support to live out the rest of their life in adequate comfort and peace.
However, if you are among those who wish to save enough by the age of retirement that you don’t have to rely on the government, then there is good news.
Compared to five other developed countries, UK demands people to save the least portion of their income in their retirement fund to ensure a comfortable lifestyle when that periodic salary stops pouring into their bank account.
Millennials Are Not Saving
The baby boomers have clearly not invested in their retirement planning, at least as much as they should have.
Many are wondering whether most baby boomers are even prepared to deal with the shock of retirement when that steady income stops, and they have to live off their retirement fund. And unfortunately, millennials seem to be at an even worse trajectory.
Nowadays, what we have is a generation of millennials who spend most or all their disposable income on temporary luxuries like branded clothes and dinners at fancy restaurants, leaving absolutely nothing in their banks as reserve for the future.
Not only that, but the cost of living has increased to such a great extent that it has naturally become very difficult to stash away a certain percentage of the income into a savings account.
Just How Much Do You Need To Save?
This is among the most common questions asked by millennials who are only starting to think about retirement, mostly because they need to ascertain how significantly they need to alter their spending decisions to save enough for a comfortable retirement.
Thankfully, the US-based financial services firm Fidelity Investments released a research which has provided estimates about how much we need to have stashed away in the bank for retirement purposes.
The research has focused on countries such as the UK, Japan, Canada, and also Germany and Hong Kong, providing guidelines about appropriate levels of savings according to age.
The company conducted a similar study for the US earlier this year which garnered a lot of attention on the internet as it was the first of its kind, offering people approximate ballpark figures to monitor their retirement planning progress.
The Milestones
According to the research, by the time you turn 30 years of age, you should have at least 1x your most recent annual salary stored in a savings account. This figure is consistent for all the countries in this study excluding Hong Kong, where people are recommended to have 2x their annual salary stacked away by 30.
After that, the savings targets vary for countries, and the British people should be happy about the fact that they are expected to save the least among the six countries which Fidelity Investments has included in their research work so far. For example, by 40 Britons are expected to save 2x their annual salary, while Germans need to have 4x their annual salary by that time.
By retirement age, people in the US and Germany need 10x their last annual salary stored in their savings, while people in Hong Kong need 12x and those in Canada need 11x. Japan and UK have fared the best among all these countries, as their citizens require only 7x their last annual salary to ensure a comfortable retirement period.
Guidelines For Savings
So, the question remains, how much do you need to save per year to reach these milestones? According to Fidelity Investments, that figure also varies by country, and again people in the UK need to save the least per year, only 13% per year.
In comparison, people in the US need to save 15%, Canadians and Japanese need to save 16%, and Hong Kong and Germany citizens need to save 20% and 21%, respectively.