Employees planning to retire in 2018 are expected to receive an average annual income of £19,900, according to research by Prudential.
Its Class of 2018 report, which surveyed 9,896 non-retired UK adults aged 45 or more, including 1,000 UK adults who plan to retire this year, also found that employees planning to retire in 2018 expect to receive an average annual income that is 10% higher than those who retired in 2017. Last year’s retirees had an average expected annual retirement income of £18,100.
Retirees in 2018 are set to receive the highest average expected annual retirement income since 2008, predicting an income £1,200 more than 2008’s £18,700 figure. Expected retirement incomes have grown steadily since 2013, which recorded a low of £15,300 a year.
Predicted annual retirement incomes next jumped up between 2014 and 2015, rising from £15,800 to £17,000. This further increased to £17,700 in 2016. Average annual retirement incomes last fell between 2008 and 2013, with retirees expecting £17,800 in 2009, £16,500 in 2010, £16,600 in 2011, £15,500 in 2012, and £15,300 in 2013.
Under half (46%) of respondents who plan to retire in 2018 feel they are either not financially well prepared for retirement, or are unsure about their preparations. Half (50%) of respondents believe their expected income will enable them to have a comfortable retirement, and 27% think they do not have enough money for retirement.
Vince Smith-Hughes (pictured), 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% 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 [across an individual’s] working life.”
Peter Bradshaw, national accounts director at Pension Monster, added: “Even if today’s retirees can expect a little more income in retirement, many still won’t have enough in their pension pots to enjoy retirement to the full. To avoid missing out on retirement goals, it’s crucial more is done to educate younger people on the importance of saving early on in their careers and keeping track of their funds as they grow.”
