One in Seven to retire without a pension
The insurer’s Class of 2013 research revealed that the average person planning to retire this year will rely on the State Pension for more than a third (36%) of their income.
Analysis by Prudential also revealed that nearly one in five (18%) of those planning to retire this year will be below the poverty line.
The Joseph Rowntree Foundation estimates that to be above the poverty line a single pensioner in the UK needs an income of at least £8,254 a year, yet 18% of those retiring in 2013 expect to retire on less than this.
Vince Smith-Hughes, retirement income expert at Prudential, said: “Against a backdrop of rising living costs the basic State Pension alone is not nearly enough to provide a comfortable standard of living.
“While it’s a very valuable source of additional income for millions of pensioners, the State Pension should ideally only represent a part of someone’s retirement income, not all of it.
“Relying on the State will see many people retiring below the poverty line this year which shows the importance of building up a personal pension.
The findings also highlight a significant gender divide with 21% of women expected to retire below the poverty line in 2013 compared with 14% of men.
In addition women are nearly three times more likely than men to have no other pension – 23% of women retiring in 2013 will retire without a private pension, compared with just 8% of men.
The State Pension accounts for 43% of average retirement income for women in 2013 while the average man retiring this year will receive 30% of his income from the State.
Prudential’s research shows that nearly a quarter (23%) of people retiring this year overestimate what the State Pension pays by more than £600 a year and 10% have no idea how much it pays.
Regionally people retiring this year in the East Midlands are the most likely to rely on the State Pension (21%).
In contrast those in the West Midlands will be the least reliant with just 10% claiming that they’ll be relying on the State Pension for their whole retirement income.