Britons planning to retire in 2018 are expected to live on an average annual income of £19,900 ($27,328), which is its highest level since the financial crisis of 2008, according to research by Prudential.
Expected retirement incomes have now risen for five consecutive years, according to the Prudential report, when they hit a low of £15,300 in 2013. Prudential’s annual study shows that expected incomes have now surpassed their pre-financial crisis levels, and are £1,200 higher than the £18,700 expected in 2008. It also shows that retirement incomes are up 30% in just the past five years.
However, despite the increasing retirement incomes, the report said that 46% of people planning to retire in 2018 feel they are either not financially well-prepared for retirement, or are unsure about their preparations. At the same time, just 50% said they believe their expected income will enable them to have comfortable retirement, and 27% believe they do not have enough money for retirement.
“The 10% rise from last year is even more impressive given the economic and political uncertainty that savers are having to cope with,” said Vince Smith-Hughes, a retirement income expert at Prudential in a release. “That uncertainty is however impacting the confidence of nearly half of the Class of 2018, who fear they aren’t financially well-equipped.”
Although the steady increase in retirement incomes is welcome news, UK retirees still face a struggle, according to a December report from the Organization for Economic Cooperation and Development (OECD). The OECD report found that current poverty levels of those aged 75 and over in UK are 18.5%, compared to 11% among the whole population and just over 10% for those between the ages of 66 and 75.
The report also found that at retirement, the average British worker will receive a state pension and other benefits worth only 29% of what they had been earning as a full-time worker. This is the lowest among OECD countries, where the average retiree will receive a state pension and benefits worth approximately 63% of what they earned while working.
“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,” said Smith-Hughes.
The Fall and Rise of UK Retirement Incomes
Retirement Date | Expected Income |
2008 | £18,700 |
2009 | £17,800 |
2010 | £16,500 |
2011 | £16,600 |
2012 | £15,500 |
2013 | £15,300 |
2014 | £15,800 |
2015 | £17,000 |
2016 | £17,700 |
2017 | £18,100 |
2018 | £19,900 |
Source: Prudential
Tags: income, Pension, Prudential, Retirement, UK