Retirement income expectations drop
Expectations of income in retirement have dropped considerably over the past two years, research has found.
A poll of more than 1500 UK consumers for the CoreData Research Pensions and Retirement 2012 report, found that the average individual now anticipated needing £18,000 per year in retirement, just £2400 above the minimum income standard laid down by the Joseph Rowntree Foundation, a social policy research and development charity.
Expectations of income in retirement overshot the minimum income standard by as high as £13,548 in 2010, with people expecting to need a net figure of £2329 per month. The net figure had dropped to £1503 per month by 2012.
The foundation said the minimum income standard in 2010 for a single person in the UK was £14,400.
Craig Phillips, principal of CoreData Research UK, said: “The drastic drop in the forecasts of how much money people think they will need suggests that the days of overblown extravagance are over and people can be considered to be now more realistic about the lifestyle they will be able to afford in retirement.”
But he added that young people could be taking this restraint a step to far, and underestimating their financial needs once they retire.
Individuals over the age of 30 and under 60 expected to have between £1400 and £1500 per month to live on while people on the brink of retirement believed they would have around £1700 to hand every month.
Mr Phillips added: “One can argue that the people who are at retirement’s door have a clear idea of how much money they will actually have once they leave the workforce and this figure, though higher than younger people’s expectations is still just £400 a month above the minimum they need to cover basic costs.”