Retirement income expectations have fallen over the past two years
The poll of 1,507 consumers found the average individual anticipates needing £18,000 a year or £1,503 a month after tax. This compared to £27,000 a year or £2,329 a month in 2010.
“The drastic drop in the forecasts of how much money people think they will need suggests that the days of overblown extravagance are over and people can be considered to be more realistic about the lifestyle they will be able to afford in retirement,” says Craig Phillips, principal at CoreData Research UK.
CoreData has said this sum is just £2,400 above the minimum income standard – the amount a person would need to cover bare necessities. Research by Joseph Rowntree Foundation in 2010 said a single person in the UK would need £14,400 or £1,200 a month to afford the basics in retirement.
Prudential has said you would need a pension pot of around £450,000 to receive an annuity paying £18,000 a year before tax.
Vince Smith-Hughes, a retirement expert at Prudential said: “I’m quite surprised the figures are as large as they were. With Prudential’s Class of 2012 research, the average income figure we arrived at was £15,500.
“When people talk of having a salary to live on; [they] think (£18,000) is quite a lot. People don’t take into account any fixed cost they’ve got or rent and cost of food. I think if you express it in terms of a weekly figure and say that’s before fixed costs are taken account of- it starts bringing it home to people that it’s not a lot.”