People planning to retire this year are expecting to live on an average annual income of £18,100, according to latest research. The figure now stands at its highest level since 2008 and shows a fourth consecutive annual increase.
Each year, financial company Prudential conducts its unique research into the financial plans and aspirations of people planning to retire in the year ahead. This year’s retirees – the Class of 2017 – expect an income £400 a year higher than those who gave up work in 2016, whose average expected annual retirement income was £17,700.
Still below 2008 level
Expected retirement incomes have now risen consistently since 2013 when they hit a low of £15,300. However, the study, now in its tenth year, shows that expected incomes are still struggling to recover to their pre-financial crisis levels, remaining below the 2008 peak of £18,700.
The annual research has tracked retirement trends over a decade that has seen some of the biggest changes to pensions in generations, and there are signs that these ongoing changes may be impacting retirees’ confidence about the future. For example, the research found that nearly half (45 per cent) of people planning to retire in 2017 feel they are either not financially well prepared for retirement or are unsure about their preparations.
Kirsty Anderson, a retirement income expert at Prudential, said: “The continued growth in retirement incomes is something that I’m sure will be welcomed by everyone planning to retire this year. However, it is striking that the expected income of people who retired at the height of the financial crisis was higher than for those who are giving up work in 2017 and still playing catch up 10 years later.
“After a decade of unprecedented changes to the rules around pensions, we are also seeing a degree of uncertainty from retirees about whether the amount they’ve saved will leave them financially prepared for the years ahead. For many people, the value of a consultation with a professional financial adviser, both when saving into a pension and when considering the income options at retirement, should not be underestimated.
“Today, as in 2008, the message for people looking to make their retirement as financially comfortable as possible should be to try to save as much as possible from as early as possible in their working lives.”