We examine the data to determine the average pension pot for various age groups, so you can see how your pension pot stacks up against your peers
Were often told to save more for retirement, but have you ever stopped to think about how your pension pot compares to your peers?
Is your pension wealth keeping pace with the times? How does your nest egg compare to those in your age group?
When you have a lot of competing priorities for your money, like paying off your mortgage or sending your children to private school, saving for retirement can be challenging. You will receive a base income from the state pension (roughly 11,975 annually if you are eligible for the full new state pension), but this is insufficient to support a comfortable retirement.
Employer contributions to pensions and auto-enrollment are benefits for employees, but self-employed workers face additional challenges because they are responsible for opening and funding their own pensions.
We can see some trends and how we're doing in comparison to the average by comparing ourselves to people in our age group. But keep in mind that every person's situation is unique, including with regard to income and retirement objectives. High-balance super savers or low-paid employees who start out with small balances can distort average balances.
As demonstrated by the so-called gender pension gap, which indicates that by the time they reach retirement age, women typically have 85,000 less than men, pension wealth also varies between men and women.
Your net worth and the size of your pension pot are frequently correlated; you can use our guide to find the average net worth by age.
It is not a guarantee that you will reach your retirement objectives, even if your pension fund exceeds the average for your age group. Are you on track to be able to afford your ideal retirement, regardless of how you stack up against your peers?
Whether it's switching to a less expensive provider or employing a tactic like the 4 percent rule, there's almost always more that can be done to increase your pension.
Additionally, try not to become anxious if it's lower. Consider whether your pension funds are on track to help you achieve your long-term objectives. If they are, remain composed and continue. If not, now is a great time to consider ways to improve your nest egg.
The actions you take now can have a significant impact on your quality of life later on, even if you are many years away from retiring.
Age-specific average pension pot.
Seven distinct age groups' average pension pot values are available from the Office for National Statistics (ONS).
Data from Fidelity shows a comparable, sizable gender pension disparity.
PensionBee provided BFIA with the following data, which illustrates the average pension of its clients.
18, 29, 3,609, 30, 39, 10,372, 40, 49, 23,807, and 50 and older, 42,503 years old.
If you're falling behind your age group, don't freak out.
Compounding, tax relief, investment gains, and consistent saving can all help a pension balance that may appear low now increase in value over time.
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, says, "Building up a good level of pension savings can feel like a big mountain to climb, but it is precisely the regular drip feed of contributions mixed with long-term investment growth that can see the amount you build up really grow over the years."
It can make a big difference to take consistent steps like increasing contributions as and when you have extra money, like if you receive a pay raise. You can also gain some understanding of how much you are expected to receive and how increasing your contributions will affect your retirement income by using pension calculators.
Lisa Picardo, chief business officer UK at PensionBee, echoes this advice: "The first course of action should be to check in on your current pension contributions and consider raising them by 1 or 2 percent if you can afford to do so. Compound interest is a benefit of pensions, so even modest one-time or recurring contributions can add up to a substantial pension pot over time.
"The persistence of the gender pension gap is extremely disappointing," she continues, adding that it is encouraging that younger savers are expected to build up larger pension pots than previous generations.
Female savers must be encouraged to contribute as much as possible to their pension from the beginning of their careers, as the pension gap only gets wider as people age, according to Picardo. For those with caring responsibilities, its important to continue paying into your pension in whatever quantity you can. If it makes financial sense, you may also want to ask a partner to contribute to your pension on your behalf.
We go into greater detail about this subject in Can you contribute to someone else's pension and how much can you contribute?
The BFIA has created a useful guide if you're curious about the average savings amounts by age.
Leave a comment on: Pension pot average by age