Retirement incomes hit new record high

People planning to retire this year are expecting to live on an average annual income of £19,900, according to the latest research by Prudential.

The figure now stands at its highest level since the survey began in 2008 and after five consecutive years of rising incomes.

Each year 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 2018 – expect an income 10 per cent higher than those who gave up work in 2017, whose average expected annual retirement income was £18,100.

Expected retirement incomes have now risen consistently since 2013 when they hit a low of £15,300. Prudential’s annual study, now in its eleventh year, shows that expected incomes have now passed their pre-financial crisis levels and are £1,200 higher than the £18,700 expected in 2008.

The Class of…research has tracked retirement trends over a period that has seen some of the biggest changes to pensions in generations as well as major political and economic upheavals and there are signs uncertainty may be hitting confidence despite rising incomes.

Despite the record increase, this year’s findings revealed that nearly half (46 per cent) of people planning to retire this year feel they are either not financially well prepared for retirement or are unsure about their preparations.

Meanwhile, just half (50 per cent) believe their expected income will enable them to have comfortable retirement while 27 per cent believe they do not have enough money for retirement.

Vince Smith-Hughes

Vince Smith-Hughes, a retirement income expert at Prudential, said: “The new record high for expected retirement incomes is good news for people planning to retire this year highlighting how saving for the future is paying off.  The 10 per cent rise from last year is even more impressive given the economic and political uncertainty that savers are having to cope with.

“That uncertainty is however impacting the confidence of nearly half of the Class of 2018 who fear they aren’t financially well equipped. For many a consultation with a professional financial adviser, both when saving into a pension and considering the income options at retirement, could be a major help.

“But the message remains the same for anyone looking to make their retirement as financially comfortable as possible - try to save as much as possible as early as possible in your working life.”