Expected retirement incomes are now £1,200 higher than what anticipated by people retiring in 2008
This is the most generous assumption for their incomes in at least a decade as expected retirement incomes are now £1,200 higher than the £18,700 anticipated by people retiring in 2008.
But experts warned that expectations might not be matched by reality after more than a quarter of upcoming retirees admitted they do not have enough money saved for their old age.
And nearly half (46 per cent) feel they are either not financially well prepared for retirement or are unsure about their preparations.
Typically those retiring in 2018 expect to have a pre-tax income of £19,900 a year, found research by pension giant Prudential.
They calculate having an average income 10 per cent higher than those who ended their working lives in 2017, whose average expected annual retirement income was £18,100.
But generous ‘gold-plated’ final salary pension schemes which guarantee an inflation-proof income have become more scarce in recent years.
Only half of employees approaching the end of their working lives believe their expected income will enable them to have comfortable retirement while 27 per cent say they do not have enough money for retirement.
Steve Wilkie, of retirement specialist Responsible Life, said: “A lot of people are in for a nasty shock when they discover what they expected their income to be and what they actually have at their disposal are world’s apart.
“Too often, people grossly underestimate, or don’t even know, how large a pension pot they will need to even get close to the salary they were earning before they retired.
“Typically, someone would need to have built up a £100,000 pot to have an income of around £5,000. But millions of people aren’t even close to a pot of that size.
“The problem persists that saving into a pension is still not a priority, particularly when the cost of living remains so high and families are struggling to pay the mortgage and household essentials.
“It’s the classic ‘stick your head in the sand’ syndrome and worry about it another day.
“That attitude was fine when we had lovely final salary pension schemes, but very few exist anymore, with most being turned into a market-rate annuity or a drawdown facility.
More than a quarter of upcoming retirees said they do not have enough money saved for their old age
“More financial education is needed on being financially prepared for old-age, and it needs to be drummed home, again and again, how vital it is to save into a pension as early as possible.”
Earlier this week the Daily Express reported how millions of UK pensioners are worryingly reliant on a basic state pension of just £7,000 a year to pay the bills.
For poorest pensioners, three in every £4 of their income comes from the state pension, rising to almost nine in every £10 when other state benefits are included, according to Age UK.
The Prudential report found expected retirement incomes have been on the increase each year since 2013, when they hit a low of £15,300.
Retirement incomes have been on the increase each year since 2013, when they hit a low of £15,300
Vince Smith-Hughes, a retirement income expert at the group, 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.
“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.”
Some 1,000 people planning to retire in 2018 were surveyed for the report.
Source : EXPRESS