People retiring in 2012 expect to live on an average annual income of £15,500 – over £1,000 a year less
(6 per cent) than those who retired in 2011. The figures come from Prudential’s unique Class of 2012 research, which provides insights into the financial expectations of Britons planning to retire in the next 12 months.
Expected annual retirement incomes
The results of Prudential’s annual survey, first carried out in 2008, show that expected annual retirement incomes have dropped by more than 16 per cent in the last five years. The Class of 2008 retirees 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.
As 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. Fewer than two in five (37 per cent) of the Class of 2012 say that they have saved enough to secure a comfortable retirement.
Gender difference
Men are more optimistic about their retirement than women, with 45 per cent of men confident they will be financially comfortable compared with 31 per cent of women. However, nearly one in five (18 per cent) of those planning to retire in 2012 have no idea of the level of income they will need in order to live comfortably.
The perfect storm
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. However, by taking some practical steps now, workers and imminent retirees could ensure a more comfortable retirement. For those who are still working, it has never been a more important time to save into a pension.
However, even if you are due to retire this year, you could still make your retirement funds generate better incomes.
Source – Online survey conducted by Research Plus on behalf of Prudential between 2 and 12 December 2011 among 9,614 UK non-retired adults aged 45+, including 1,003 retiring in 2012. All retirement income figures within this release are rounded to the nearest hundred.
