The annual report by the Prudential into retirement incomes has recently been published and shows welcome news. The ‘class of 2018’, retiring this year, will do so with an average income of £19,900 a year. This is the highest figure on record since the survey began in 2008 and, in fact, has risen consistently over the last five consecutive years.
This means that those retiring this year can expect an income 10 per cent higher than those who gave up work in 2017, when the average retirement income was £18,100. The report reveals that incomes have now passed their pre-financial crisis level and are £1,200 higher than the £18,700 expected in 2008.
This reflects the fact that people are amassing larger amounts of savings to be able to produce these income figures. It also demonstrates an increased awareness of the need to save. The positive trend has occurred while pensions have undergone the most fundamental change in generations, and despite the political and economic upheaval of recent years.
To underline this, if people are receiving an annual income of £19,900, over a period of thirty years from the age of 60-90 that works out at £597,000 – without factoring in any investment or interest growth. That’s certainly a reassuring amount to have put aside and highlights how saving for the future is paying off.
The 10 per cent increase announced in this report may sound impressive enough, but it’s worth considering that the impact of auto enrolment is likely to only improve this figure in the future. The first group of people who have saved a substantial amount via a workplace pension due to auto enrolment may be still some way off retirement, but when they do, it seems probable they will have a decent amount set aside.
The message remains the same as ever – anyone looking to make their retirement as financially comfortable as possible should start to save as early as they can. The report showed that nearly 46% of those approaching retirement this year were uncertain as to whether they would be financially well-prepared enough. The figures indicate though, that as people become increasingly aware of the importance of retirement planning and save to a greater degree, they should end up with even more in their ‘pension pot’ than ‘the class of 2018’.
Get in touch with one of our consultants to find out what your expected income figure will be and whether it will enable you to live the retirement you want.
The value of your investment may go up as well as down. You may not get back what you initially invested.