Lawyers need to save Â£18,000 a year to ensure comfortable retirement
Current saving levels not sufficient to generate Â£36,000+ per annum
Lawyers should start saving earlier and significantly more than they are at the moment if they want to enjoy a comfortable retirement, according to the latest findings on the profession’s attitude to pensions.
At present, lawyers are saving on average £1,042 a month, which is only enough to ensure an annual retirement income of £27,539, according to research by Wesleyan. What’s more, the specialist financial mutual warned, the average age at which lawyers started saving above their employer’s basic pensions contribution was 29. At that point they needed to make monthly pension savings of £1,523 – or £18,276 a year – to expect the same annual income.
The survey, which canvassed 100 lawyers, also found that they were nevertheless looking to earn more than £36,000 a year in retirement, that is, nearly £10,000 more than Wesleyan estimated they would, based on average savings.
Research earlier this year by retirement lending adviser Bower Private Client showed that 29 per cent of lawyers were planning to use funds from their home or buy-to-let properties to fund their retirement plans. However, nearly one-third of those surveyed at the time said they were not confident about their retirement planning, with 14 per cent admitting to being ‘very unconfident’ their plans will work out.
Wesleyan’s previous findings made for more optimistic reading. The mutual said in January 2015 that lawyers needed to save £700 per month – or £8,400 a year – from the age of 25 if they were to enjoy an annual income of £35,680.
By way of comparison, research by recruiter Hudson suggest that newly qualified solicitors in the regions earn between £22,000 and £32,000 a year, rising to between £32,000 and £43,000 by the time they are 29.
Hudson’s 2016 legal salary guide shows that solicitors in the regional offices of larger London firms are paid on average £10,000 more per annum at the beginning of their careers, reaching annual salaries of between £42,000 and £65,000 for four-year PQEs.