Retirement incomes rise to their highest level in a decade
People planning to retire this year are expecting to live on an average annual income of £19,900, compared to just £15,300 in 2013. This is 10% higher than those who gave up work in 2017.
Prudential’s annual study is now in its eleventh year and showed that expected incomes have passed their pre-financial crisis levels – £1,200 higher than the £18,700 expected in 2008.
However, in spite of this record increase, almost half (46%) of people feel they aren’t financially well prepared for retirement or are unsure about their preparations. That said, half believe their expected income will enable them to have comfortable retirement, but 27% believe they do not have enough money for retirement.
Vince Smith-Hughes, a retirement income expert at Prudential, said: “The new record high for expected retirement incomes is good news for people planning to retire this year highlighting how saving for the future is paying off. The 10% rise from last year is even more impressive given the economic and political uncertainty that savers are having to cope with.
“That uncertainty is however impacting the confidence of nearly half of the Class of 2018 who fear they aren’t financially well equipped…The message remains the same for anyone looking to make their retirement as financially comfortable as possible – try to save as much as possible as early as possible in your working life.”
Jeanette Makings, head of financial education at Close Brothers said it was good news that retirement incomes are on the rise, but the number of retirees still feeling financially unprepared is a concern: “With choppy economic waters ahead and inflation rising, it is essential that people make the right choices to ensure financial security in their retirement.
“Many people simply don’t understand which financial products they should be using at different points of their savings journey, but those on the brink of retirement are most vulnerable. It’s here that employers can play a vital role, helping to ensure that their employees have a good understanding of their own financial needs and know where to go for advice.”