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Retirement

British retirees coping on less than uni graduate salaries

Your Money
Written By:
Your Money
Posted:
Updated:
30/09/2013

British retirees are financially worse off than new university graduates, according to a report.

The average retired person brings home just £15,776.27 a year – which is nearly £6,000 less than a 21-year-old fresh out of university, the research by Skipton Financial Services found.

A sixth of retirees rely solely on their state pension, which means they earn a maximum of £146.40 per week, or £7,560.80 per year, once guarantee credit is added to top up the basic weekly state pension of £110.15.

In fact, 70% of British retirees are finding it even harder today than 25 years ago when they were earning the same amount because living costs are so much higher now.

And while 45% of elderly people have a private pension and a further 56% have a company pension, a third admits they find it hard to see it through to the end of the month.

Over a quarter admitted they find it hard to manage their bills and the rest of their outgoings, with the same percentage having less than £100 of disposable income to live on for the whole month.

Just under half of retirees say the rise in the cost of petrol, food and utility bills has made it hard for them financially, while 33% spend most days worrying about money and how they are going to survive.

A third of those polled deeply regret not preparing for retirement earlier – and on reflection wish they had taken action by the age of 30.

Three in 10 people didn’t save a penny towards their retirement years and 45% assumed they would be able to fall back on the state pension, without needing to make other provisions – not realising how low an income this really is.

Andrew Barker, managing director of Skipton Financial Services, said: “Legislation earlier this year announced that the state retirement age will increase to 67 between 2026 and 2028, followed by future increases linked to life expectancy, which is likely to see young workers today not retiring until they are into their 70s. This will at least mean these people have more time to financially prepare for their retirement, as well as a shorter retirement to fund.

“One thing which will hopefully help future generations of retirees is auto-enrolment, meaning less people will have to rely solely on their state pension. The key thing is to start putting money aside as soon as you can after starting employment, as often people could have more disposable income when young, before they get onto the property ladder and have children to support.

“Many people never tie their retirement aspirations up with their financial arrangements, and as such rarely think about what it will take to fulfil those goals.

“Yet for a lot of people, the future will soon be the present and it could be filled with regrets from knowing that it could have been different, had they made more of their finances when they had the opportunity.”


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