Retirement income slumps to 5-year low
The results of Prudential’s annual survey show expected annual retirement incomes have dropped by more than 16% in the past five years.
People retiring in 2008 looked forward to a total annual income including private, company and State pensions of approximately £18,600 – £3,100 a year more than those planning to retire this year.
In a sign of the ongoing financial challenges facing those due to retire in 2012, one in five will get by on an expected annual income of less than £10,000.
Londoners have the highest average expected incomes of £17,900, while those in Yorkshire and Humberside have the lowest at £12,800.
Fewer than two in five (37%) of those retiring in 2012 say they have saved enough to secure a comfortable retirement.
Men are more optimistic about their retirement than women, with 45% of men confident they will be financially comfortable compared with 31% of women.
But nearly one in five (18%) of those planning to retire in 2012 has no idea of the level of income they will need in order to live comfortably.
Vince Smith-Hughes, Prudential’s retirement income expert, said: “The current economic climate has created the perfect storm for people in the run up to retirement.
“The impact of the credit crunch, banking crisis, recession, and concerns over the Eurozone, has been reflected in the fact that expected retirement income levels have hit a five-year-low.
“It is concerning that expected retirement incomes are going down while pensioner expenditure is going up.”
Prudential said there are some practical steps that workers and imminent retirees can take to ensure a more comfortable retirement.
“Consulting a professional financial adviser can help savers to make more informed pension saving and retirement income decisions,” Smith Hughes added.