Personal Pension  

MGM warns savers to mind the £5,954 pension gap

MGM Advantage has calculated the pension funding gap is £5,954 a year for the average retiree, which would require a pension pot in the region of £100,000 using an annuity.

Andrew Tully, pensions technical director of MGM Advantage, said the figure, which he came to using official data on pension requirements, showed the true scale of the problem facing people approaching retirement.

He said: “There is a chasm between savings and the ‘ideal’ retirement income, which should serve as a wake-up call for many people.

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“The scale of the challenge becomes even scarier if want your retirement income to keep pace with the cost of living and provide for your spouse.

“There are options for people who might have left saving for retirement too late, for example you could consider delaying retirement, continue to work part-time, use equity release or even downsize your home.

“The recent changes brought about by the Budget potentially provide more choice for people looking to generate a retirement income.

“But you still need a sizable pension pot or other savings to draw on to provide a sustainable income.”