Retirement income expectations drop, CoreData
The average individual now anticipates a retirement income of £18,000 per year, £2,400 above the minimum income standard, compared to expectations of £31,548 in 2010, a CoreData study has revealed.
The past two years of economic stagnation and a steady stream of bad news on the financial front have permeated the British consumers mind-set and they have adjusted their future income prospects as a result, CoreData said.
The study found that in 2010 people expected to need £2,329 per month net of tax while in 2012 this monthly income prospect dropped to £1,503 per month.
According to the Joseph Rowntree Foundation, in 2010, the minimum income standard for a single person in the UK was £14,400. CoreData said this figure would cover the bare necessities.
Individuals now only expect to have around £200 more than they need to cover their essential costs of living during their retirement.
Craig Phillips, principal of CoreData Research UK, said the drop in how much money people think they will need suggests 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.
However, young people are underestimating their financial need with individuals under 30 thinking they can get by on £1,233 per month once they retire. In today’s monetary terms, this will not be sufficient to cover their expenses.
People over the age of 30 and under 60 on the other hand expect to have between £1,400 and £1,500 per month to live on while people on the brink of retirement believe they will have around £1,700 to hand every month.
Mr Phillips said: “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.”