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Nearly 40 per cent of adults are on track to enjoy a decent lifestyle in retirement while the rest are set to struggle, new research reveals.

A single person needs a minimum income of £20,800 per year, while a couple requires £30,600 to achieve financial security, according to an industry measure of retirement living standards.

Those figures include the state pension, which is currently worth around £9,300 per person if you qualify for the full flat rate.

Income plans: Well under half of adults are heading for a moderate or comfortable retirement

Income plans: Well under half of adults are heading for a moderate or comfortable retirement

A new savings and resilience barometer launched by Hargreaves Lansdown looked at how likely people of different ages and on different incomes are to achieve a ‘moderate’ income threshold or above.

This found that a higher than average 45 per cent of people aged 40-56 have got their savings on track.

Hargreaves suggests this could be because they have reached an age when they are more likely to take retirement seriously, and because they could have benefited from generous final salary pensions before they were phased out in the private sector.

>>>What do minimum, moderate and comfortable retirement lifestyles look like? Find out below

Meanwhile, 36 per cent of people aged 25-40 are on course, but just 18 per cent of under-25s, although these are the generations most likely to benefit from auto-enrolment into work pensions.

Some 70 per cent of high earners, making £102,800-plus a year, are on target – meaning a sizeable cohort of affluent people could be leaving themselves short in old age.

The percentage of those making decent provision drops steeply to 47 per cent in the next highest income group of those earning £49,000-£102,800.

The new Hargreaves barometer is compiled in partnership with the forecasting firm Oxford Economics.

It is based on data from the Wealth and Asset survey by the Office for National Statistics – which draws its information from 10,000 households – plus other data from official sources.

Hargreaves says the barometer is structured around five pillars of financial behaviour – controlling your debts, protecting your family, saving for a rainy day, planning for later life and investing to make more of your money.

>>>Want to get your pension on track? Find a to do list below

Are you heading for a basic, moderate or comfortable retirement?

Source: Pensions and Lifetime Savings Association

Source: Pensions and Lifetime Savings Association

In an attempt to show people what different levels of income in old age will mean to them in reality, the Pensions and Lifetime Savings Association created a measure which splits typical lifestyles into three groups.

The results indicate how big a shop you might be able to afford each week, where and how often you can take holidays every year, whether you will be able to run a car, and what you might be able to spend on clothes, shoes, presents and your home. Read more here and see below.

Source: Pensions and Lifetime Savings Association

Source: Pensions and Lifetime Savings Association

‘Most people would like to think they will be able to afford a few luxuries here and there during their retirement years,’ says Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown.

‘This data shows we are way off track with less than 40 per cent of people on course to enjoy a moderate lifestyle in retirement.

‘Without action many people face living only the most basic standard of living in their later years.

‘It’s tempting to shelve the longer-term planning when there are pressing demands on our finances. However, we know the earlier you start contributing to your pension the better.

‘We need people to engage more and if possible, go over and above auto-enrolment minimums when it comes to contributions as over time this can add up and make a huge impact on your resilience in retirement. 

‘Some employers are willing to pay more into your pensions if you do and so it’s worth asking if this is also available as it can really make a difference over the long term.’ 

Separate research published today shows the latest increase in the state pension age from 65 to 66 means significantly higher numbers of both men and women are carrying on working in later life.

But the Institute for Fiscal Studies, which carried out the study for the Centre for Ageing Better, found the effects were unequal.

An additional 7 per cent of men and 9 per cent of women are still working at age 65 overall, but the increase is 10 per cent and 13 per cent respectively among people living in the poorest areas of the UK.

Those who decide to delay retirement due to the rise in the state pension age to 66 are likely to be financially better off as a result, but they lose out on leisure time and other benefits of retirement, according to the IFS. 

How to get your pension on track

If you are worried about your pension and whether you will have enough, read a full 10-step guide to sorting it out here. 

To get started, investigate your existing pensions. Broadly speaking, you need to ask schemes the following:

– The current fund value

– The current transfer value – because there might be a penalty to move

– Whether the pension is in a final salary or defined contribution scheme

– If there are any guarantees – for instance, a guaranteed annuity rate – and if you would lose them if you moved the fund

– The pension projection at retirement age.

You can use a pension calculator to see if you have enough – find This is Money’s here.

You should add the forecast figures to what you anticipate getting in state pension, which is currently £179.60 a week or around £9,300 a year if you qualify for the full new rate. 

Get a state pension forecast here.

If you are tempted to merge your old pensions, check out some tips on how to decide here.  

If you have lost track of old pensions, the Government’s free tracing service is here. 

Take care if you do an online search for the Pension Tracing Service as many companies using similar names will pop up in the results.

These will also offer to look for your pension, but try to charge or flog you other services, and could be fraudulent. 

If you are in your 20s, we have a special pension guide here.  Self-employed people can find out how to sort out their pensions here. 

Women, who tend to miss out because they get lower pay and do unpaid caring work, can find out how to increase retirement savings here.

TOP SIPPS FOR DIY PENSION INVESTORS

Some links in this article may be affiliate links. If you click on them we may earn a small commission. That helps us fund This Is Money, and keep it free to use. We do not write articles to promote products. We do not allow any commercial relationship to affect our editorial independence.

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Every month, more than ten million people squirrel away some cash towards retirement. But are we saving enough to live comfortably in later life – and retire when we want?

Surprisingly few people are able to answer that question. Although one in four aims to retire at age 60, many simply have no clue what their pension savings will afford them.

That is why The Mail on Sunday has teamed up with pensions and investment business Royal London to crunch the retirement numbers.

We have looked at how much someone would need to save every month to afford a minimum, moderate or comfortable retirement.

Life's a beach: Although one in four aims to retire at age 60, many have no clue what their pension savings will afford them

Life’s a beach: Although one in four aims to retire at age 60, many have no clue what their pension savings will afford them

We have also calculated what that monthly sum would have to be if you want to retire at age 55, 60, 65 or 70. Here’s what we found.

How we worked out the savings figures

No two retirements are the same. The amount you will need will depend on a multitude of variables, including the type of lifestyle you want, the state of your health, your normal expenditure, who else you live with and much more.

The figures are only a guide to give you a sense of the level of saving you may need to consider.

For these calculations, Royal London has assumed that pension contributions are fixed every month, and that investments grow at five per cent a year, inflation is two per cent, and annual management charges on your pension are 0.5 per cent.

They have also assumed that the pension pot will be used to buy a single life annuity to provide an income for life.

In reality, many savers are choosing not to buy an annuity, but rather to manage their own pension income through drawdown.

The figures used for a minimum, moderate and comfortable retirement are taken from calculations by the Pensions and Lifetime Savings Association.

The annual amounts are £10,900, £20,800 and £33,600 a year respectively for a single person. These figures assume a full state pension worth £9,339 a year.

A minimum income would cover all your needs with a little left over for fun; a moderate one offers more financial security and flexibility; and a comfortable income even more financial freedom and some luxuries.

When you start is as vital as how much

When you start saving towards a pension is as important as how much you save each month.

If you start early, not only do you have longer to build a sizeable retirement pot, but thanks to the power of compound interest, the pension contributions that you make early on have time to grow with no extra effort from you required.

So, for example, if you want a moderate lifestyle in retirement from the age of 65, you would need to save £355 every month from the age of 22.

But, if you started saving at the age of 40, you would need to save almost double that amount – £690, to have the same retirement.

In fact, so valuable are those pension contributions early on in your career that if you saved £100 a month from the age of 18 to 38 (20 years of saving) and then stopped, you would likely have more by the time you hit retirement age than if you saved £100 a month from age 38 to 68 (saving for 30 years).

If you want a moderate lifestyle in retirement from the age of 65, you would need to save £355 every month from the age of 22

If you want a moderate lifestyle in retirement from the age of 65, you would need to save £355 every month from the age of 22

Delay a few years for a richer retirement

The simplest way to achieve a comfortable retirement is to start saving early, regularly and save as much as you can.

But that’s easier said than done. When times are tight – as they are set to be this year in particular with rising household bills and inflation – sometimes it can be hard to prioritise an event years or even decades away. So, another option is to delay retirement if you can, as our figures show.

For example, to receive a comfortable income from the age of 55, you would have to save a massive £1,360 a month from the age of 22. But if you delayed retirement until age 70, you would need to save £555 per month.

The default retirement age has been removed, so in most cases employers can no longer force workers to retire. The amount of help and resources available for older workers who want to retrain or want better support in the workplace has also improved in recent years.

Go to gov.uk/government/publications/help-and-support-for-older-workers for more information.

If you do choose to work beyond state retirement age, you could supplement your income with the state pension to maintain your standard of living while working fewer hours.

Alternatively, if you find you are making enough to live on, you could consider delaying your state pension to boost your payments when you do start to receive it. For every year that you delay your state pension, you receive an extra £10.42 a week when you do start to take it.

Save hard if you want to retire early

One in five workers hoping to retire early plan to do so when they hit the age of 55, a survey from Aviva found. And of those who have retired early, two-thirds are happier for it.

Start saving early and retiring at 55 needn’t be an unreachable dream. For example, if you save £90 every month from the age of 22, you should have enough for a modest lifestyle in retirement from age 55.

Bump that to £640 a month and you should be able to afford a moderate lifestyle.

For a more luxurious one, you will need to save £1,360 a month.

The best way to achieve a comfortable retirement is to start saving early, regularly, experts say

The best way to achieve a comfortable retirement is to start saving early, regularly, experts say

Your state pension will do a lot of heavy lifting

All the figures so far assume a full state pension. When this is taken out of the equation it brings home just how valuable the state pension income is for retirees.

For example, if you want to retire on a moderate income at the age of 65, you would have to save £640 every month from the age of 22 if you did not have a state pension.

But as earlier stated, to achieve the same income with a state pension, you would only have to save £355 every month. For most retirees, the state pension will form the bedrock of their income.

For someone of the same age who wants to retire on a moderate income at the age of 60, they would have to save £875 a month if they did not have a state pension – £480 a month with the full state pension.

However, younger workers may want to be a little wary of relying on it too heavily.

As our population ages, the cost of providing the current state pension continues to grow and there is no guarantee that a future government would not make it less generous in the name of affordability.

After all, the state pension age is inching up for this reason, and the state pension triple lock will be broken this year to keep costs down.

Remember… your workplace helps too

Saving £355 every month from the age of 22 – or £690 a month from the age of 40 – just to retire on a moderate income at age 65 can sound very challenging. And for many people, it will be.

However, don’t forget that not all of that monthly sum needs to come from you.

Employers are now obliged to contribute the equivalent of at least three per cent of your salary into your pension, while workers must pay in five per cent.

Some employers are even more generous. For example, if you are saving £355 a month into your pension, and that sum amounts to the minimum permitted contribution of eight per cent of your income, £133 of that will be coming from your employer and you will only have to pay the remaining £222.

So it always pays to save into a company pension if you can.

Sarah Pennells, consumer finance specialist at Royal London, says: ‘If you’re in a workplace pension, there may be ways you can pay a bit more into it.

‘For example, a number of employers will match employees’ pension contributions beyond the minimum they have to pay in under automatic enrolment rules, up to a certain limit.

‘That means that when you pay extra into your pension, your employer will pay in as well. If you get paid a bonus, you may be able to exchange some or all of it for contributions into your pension.’

Don’t forget that pension contributions are tax free. That means either they are taken from your salary before tax is paid or you can claim the tax back afterwards through your tax return or by contacting Revenue & Customs.

Pension saving can be bumpy

For the purposes of our calculations, we have assumed that contributions are made consistently, week in, week out.

In reality, this will rarely be the case. There may be periods of unemployment, time out for parenting or caring responsibilities, poor health or to retrain.

While the particulars that could see you out of work are hard to predict, it is safe to assume you may have time out of the workplace at some stage.

Therefore, it can be worth saving more at the times when you can to make up for the times that you are saving less.

Similarly, if you receive bonuses at work or have another windfall, it is always worth considering putting some of that into your pension.

Some links in this article may be affiliate links. If you click on them we may earn a small commission. That helps us fund This Is Money, and keep it free to use. We do not write articles to promote products. We do not allow any commercial relationship to affect our editorial independence.

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Why you need to try the ‘envelope’ method: The VERY simple saving trick that ensures you always have enough money for vacations and activities

  • A mum has revealed her simple money-saving trick using envelopes 
  • Tracy labelled enveloped with different family activities and the cost needed 
  • During the year she places change into the envelopes and seals once reached
  • It follows after parents were saving thousands doing the 100 envelope challenge










A mum-of-two has revealed her simple money-saving trick using a handful of envelopes.

To lessen the burden of financial pressure ahead of holiday breaks mum Tracy said she places spare change into paper envelopes labelled with different activities.

Tracy, from the UK, wrote each family day out and the amount needed on each envelope – such as £50 GPB ($93.65 AUD) for ice skating or a day at the beach.

Once she reaches the amount required, the envelope is sealed and stored away.  

Tracy said she’s been using the saving tactic for ‘years’ and shared the tip to a popular family Facebook group. 

To lessen the burden of financial pressure towards the end of the year, mum Tracy said she places spare change into paper envelopes labelled with different activities (pictured)

To lessen the burden of financial pressure towards the end of the year, mum Tracy said she places spare change into paper envelopes labelled with different activities (pictured)

‘I always feel intense pressure to do lots of things over the summer holidays and with a limited budget and lots to pay out for it can be really hard,’ she wrote.

‘A few years ago I started these envelopes. I work out some things we’d like to do, work out the cost and write on these envelopes then put them in the cupboard. 

‘Come summer time I can just grab an envelope and know we can go regardless of what’s in the bank. I’m starting early this year. Hope it helps some other families on a budget too.’ 

The budgeting tip is the perfect for beginners and parents alike to potentially save hundreds of dollars. 

It comes after hundreds tried the 100 envelope challenge last year to help save thousands of dollars – which involves labelling 100 envelopes with sums from $1 to $100.

Earlier this year the finance challenge helped Australian mum Michelle pocket more than $5,000 by the end of year. 

The challenge allows you to randomly choose any two envelopes or more from your pile every week and then place the cash into them. For example, if you pick $12 and $76, you will need to place $12 in the ‘$12’ envelope and $76 in the ‘$76’ envelope.

Filling the envelopes over any length of time will leave her with an extra $5,050 within 12 months – and it’s perfect for those who are looking to save money for holidays, Christmas presents or even paying off credit card debt.

A thrifty mother-of-three has taken on the 100 envelope challenge that will help her pocket more than $5,000 by the end of year

Once she deposits the cash into the selected envelope, Michelle then crosses off the number from her DIY chart

A thrifty mother-of-three has taken on the 100 envelope challenge that will help her pocket more than $5,000 by the end of year. The challenge allows you to randomly choose any two envelopes or more from your pile every week and then place the cash into them

‘I’m a mum of three kids and money can get a bit tight, especially now school is going back,’ Michelle wrote in her now-viral TikTok video.

‘The point of the challenge is to put the money in the envelopes. I will be depositing the cash once we complete the challenge.’ 

The mother said two envelopes are usually drawn at random every week.

‘I don’t do this every day. I change it to suit myself and my circumstances. I do it twice a week. Whatever my situation allows,’ she explained.

Once she deposits the cash into the selected envelope, Michelle then crosses off the number from her DIY chart. 

Filling the envelopes over any length of time will leave her with an extra $5,050 within 12 months

For example, she picked out envelope labelled $46 so she needed to deposit that amount in

Filling the envelopes over any length of time will leave her with an extra $5,050 in 12 months. In one of the videos, the mother picked out envelope labelled $46 (right) so she needed to deposit that amount in

Her video has since been viewed more than 140,000 times, with dozens saying they were keen to try out the money-saving method themselves.

Others suggested transferring the funds into a bank account instead of using envelopes – but many pointed out that saving money was ‘hard for some people’. 

‘I am terrible at saving money so this might be smart for me to do,’ one wrote.

The challenge is based on a formula discovered by 18th century German mathematician, Carl Friedrich Gauss.

Gauss noticed if he split the numbers 1 to 50 and 51 to 100 into two groups, he could add them together vertically to get 101.

For example 1 plus 100 equals 101, as does 2 plus 99, 3 plus 98 and so on until 50 plus 51.

The total of the two groups is therefore 50 multiplied by 101 – 5,050 – which is the amount you can save by completing the envelope challenge.

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Ovo Energy has faced widespread criticism after it sent an email of ‘energy saving tips’ to SSE Energy customers, a firm it owns, including advising them to cuddle pets to stay warm.

Other ‘tips’ included telling customers to keep the oven open after cooking and to perform star jumps. 

It comes at a time when energy prices are at record highs with costs expected to surge even further, thanks to increasing wholesale costs, with many struggling to pay their bills. 

Now Ovo has apologised for the incident, saying it is ’embarrassed’.

There are a number of energy saving tips that can help homes save over the course of a year

There are a number of energy saving tips that can help homes save over the course of a year

An Ovo Energy spokesperson said: ‘Recently a link to a blog containing energy saving tips was sent to customers. We understand how difficult the situation will be for many of our customers this year.

‘We are working hard to find meaningful solutions as we approach this energy crisis, and we recognise that the content of this blog was poorly judged and unhelpful. We are embarrassed and sincerely apologise.’

While Ovo’s tips were less than practical and subsequently faced backlash from consumers, there are still many energy saving tips consumers can put into practice.  

This is Money has spoken to Energy Helpline, Uswitch and the Energy Saving Trust, to find out how households can really save energy – and cut costs on their bills at the same time.

Much of it is common knowledge, but with bills rising, it is always useful to have a refresher: 

1. Turn devices around the home off standby, or onto idle mode. Doing so could save you £40 a year on your bills. 

2. Draught proof gaps around windows, doors and floorboards by fitting foam strips, plastic seals or brushes. Seal gaps between floors and skirting boards with a simple sealant bought from any DIY store. This could save you £30 a year. 

3. Turning the lights off when leaving a room everytime could help you save £14 a year.

4. Use your washing machine on a 30-degree cycle instead of higher temperatures, an action that could save you £10 a year.

5. Only boil the water you need in your kettle, saving £8 a year.

6. Effective insulation of your hot water cylinder is important. Even if you have thin spray foam or a loose 25mm jacket, you can benefit from increasing the insulation to a British Standard Jacket 80mm thick. This could save you £20 a year. 

Energy prices have soared in recent times with costs expected to increase even further

Energy prices have soared in recent times with costs expected to increase even further

7. Keep your shower time to four minutes. Doing so could save you £45 a year.

8. In the same vein, swapping one bath a week for a 4-minute shower could save you £7 a year. 

9. Fit an aerator onto your existing kitchen tap to reduce the amount of water coming out without affecting its effectiveness. This is a small gadget with tiny holes – they attach to the spout of taps and are cheap and easy to install. This could save you £14 a year. 

10. Only run your dishwasher when it is full to reduce the amount of water you use. Reducing your dishwasher use by one run per week for a year could save you £10 a year. 

11. Similarly, only wash your clothes in your washing machine when you have a full load. Reducing your washing machine use by one run per week for a year could also save you £10 a year. Wherever possible, reduce the temperature at which you wash at, a drop from 60 degrees to 40 degrees, for example, will make a difference. 

12. Avoid using a tumble dryer for your clothes. Instead, dry clothes on racks inside where possible or outside in warmer weather. This could save you £40 a year. 

13. Turn your a thermostat down 1 degree and save £80 a year.

14. In a home without any heating controls, installing and correctly using a programmer room thermostat and thermostatic radiator valves could save you £85 a year.

Turning your a thermostat down 1 degree could save you £80 a year, energy experts say

Turning your a thermostat down 1 degree could save you £80 a year, energy experts say

15. If you have an open chimney, draught-proofing your chimney when you’re not using it could save around £20 a year.

16. If you replace all the bulbs in your home with LED lights, you could save £30 a year on your electricity bills.

17. Fit curtains as well as blinds as this prevents cold windows from cooling down the room. Curtains are a great option for preventing heat loss – remember to close them at night when it’s colder and open them again when the sun comes out to let the heat back in. 

Keeping your curtains or blinds closed after the sun sets will reduce the amount of heat that escapes from your home through your windows, by as much as 25 per cent.

18. Bleed your radiators regularly as this can reduce your radiators from having cold spots and leaving you without warmth.

19. Keep your radiators obstruction-free as objects that are in the way can absorb some of the heat from your radiator – and one of the biggest culprits for this is the sofa.     

Anything up against your radiator will prevent it from working as effectively, and reduce the benefit you feel in your home, as the furniture absorbs the radiating heat.

If you can’t practically keep your radiator clear, just give it some space to breathe, and even pulling your settee a few inches clear will make a significant difference. 

20. Fill up your freezer: Your fridge and freezer is one of the biggest drains on your electricity usage, but there are ways to ensure both run as efficiently as possible. You want to keep your freezer full, as this means less energy is required keep it cold.

If you are nearing your big shop time, and items have dwindled, then fill up some bottles of water and pop them in, which works just as well in keeping your freezer working more efficiently.

Unlike your freezer, your fridge needs space to keep it working optimally. Make sure there is space for the cold air to circulate, especially around the top and the sides of the fridge.

What is the energy crisis? 

The crisis began in August. It was sparked by a number of factors, but ultimately was due to the lack of natural gas being produced, as well as an increase in demand.

Demand rebounded quicker than expected after the global pandemic, but reserves were slow to refill over this summer with supply from Russia lower than predicted.

As a result of this, wholesale prices started to rise with suppliers being charged much more for their gas.

They, in turn, then had to charge their customers more to cover the extra costs.

Whilst many had already hedged their bets and bought enough supply for a year in advance, meaning they were able to continue serving their customers, other providers had not done this.

This meant they were being charged the new, higher rate and could not afford it.

A total of 25 suppliers have collapsed since August, representing half of those in the market. 

Some links in this article may be affiliate links. If you click on them we may earn a small commission. That helps us fund This Is Money, and keep it free to use. We do not write articles to promote products. We do not allow any commercial relationship to affect our editorial independence.

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