Personal Pension  

Fifth of future retirees expect to be worse off: Pru

Fifth of future retirees expect to be worse off: Pru

The next generation of retirees may be worse off in retirement than those retiring this year, expecting lower average annual retirement income which would be insufficient to have a “comfortable” pensioner lifestyle, according to Prudential research.

Around 18 per cent expect to be worse off, with the insurer’s study of just over 1,000 people aged between 45-55 finding that the next generation expect to work until they are 65 years old and estimate that their average annual retirement income will be £14,000 a year.

In contrast, figures from Prudential’s study of the ‘Class of 2015’ – those planning to retire this year – showed an expected average annual income of £17,000.

Article continues after advert

Just 27 per cent of the next generation of retirees, those aged 45 to 55, believe their pension will provide them with sufficient income to enjoy what they consider to be a ‘comfortable’ life in retirement, compared with 50 per cent of those planning to retire this year.

Prudential’s research also found that this gap in retirement income comes as no surprise to the next generation of retirees. Some 70 per cent of those aged 45 to 55 said that they expect to have a lower standard of living than people currently in retirement, while only six per cent expect their standard of living to be better.

Vince Smith-Hughes, head of business development for pensions at Prudential, explained that for most people, starting pension contributions early and continuing these throughout their working life is the best way to achieve a comfortable standard of living in retirement.

“However it’s not too late for those in their 40s and 50s who are looking to top up their pension pots – for many people this is the time in life when earnings are at their highest, thus providing the best opportunities to save.

“When planning finances for life after work, consulting a professional financial adviser will be helpful for many people trying to stay on track for a comfortable retirement.”