People planning to retire this year – the Class of 2015 – expects to be nearly eight per cent better off than those who stopped working in 2014.
As the changes to pensions and saving regulations start to take effect and confidence in the economy continues to grow, Prudential found that those planning to retire in 2015 have an average expected annual retirement income of £17,000 per year, more than £1,200 higher than last year’s retirees.

However, there remains significant regional variation in retirement expectations: The North East of England saw expected incomes increase by more than a quarter (27 per cent), with large increases also seen in the South West of England (19 per cent), the West Midlands (18 per cent) and London (17 per cent). Meanwhile, those planning to retire in Scotland in 2015 expect an income that is seven per cent lower on average than those who retired last year.

Despite the increased optimism among the ‘Class of 2015’, expected retirement incomes are still £1,700 a year lower than the £18,700 expected by the ‘Class of 2008’, and £800 a year lower than the £17,800 income expected by the last of the pre-financial crash retirees in 2009.
Vince Smith-Hughes, retirement expert at Prudential, said: “Some of the increase in expectations we’re seeing could be attributed to the media coverage over recent months on the changes in the pension rules that will come into effect from April 2015. The challenge for providers and advisers is to help these pensioners to plan properly in order to benefit from the new freedoms and secure the best retirement income arrangement to suit their needs.

“The rule changes don’t alter the basic principle of needing to secure an income that will last throughout retirement. The best way to secure this is for people to save as much as possible as early as possible in their working lives. Consulting a financial adviser or retirement specialist well before giving up work can help savers to manage their retirement income expectations appropriately.”