PensionsNov 20 2015

Pru says mind the retirement expectation gap

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Pru says mind the retirement expectation gap

Those currently in employment have unrealistic expectations of when they will be able to retire and how much they will have to live on, according to Prudential.

Consumer Intelligence surveyed 1,024 UK adults during October, on the provider’s behalf, finding that the average individual under 35 expects to be able to retire at 64.

This is despite the fact that any-one born after 5 April 1978 will have to wait until they are 68 before claiming the state pension.

The research also demonstrated that younger people have higher retirement income expectations.

While those looking to retire in 2015 have an expected salary income of £17,000, those under 35 expect an annual income of £21,400 a year upon retirement.

Stan Russell, a retirement income expert at Prudential, said although people of all ages are expecting to be able to retire well before State Pension age, life expectancy continues to increase, with the average retirement now lasting nearly 20 years.

“It is encouraging to see people feeling so positive about the income they will receive in retirement; many people look forward to giving up work and doing more of the things they enjoy.

“However, in a world where fewer people will benefit from generous final salary pensions, and everyone will have to wait longer to receive the State Pension, making plans based on any false financial expectations may lead to problems later in life.”

Data released earlier this year by Prudential also highlighted that the average person planning to retire in 2015 expects to have an annual retirement income of £17,000 – 45 per cent of whom will receive their income from a defined benefit pension scheme, down from 52 per cent in 2008.

Despite the fact that the proportion of people benefiting from generous final salary schemes is falling and will continue to do so, those aged 55 and over in work expect an average annual retirement income of £19,400, 35-54 years olds expect £19,600 and the under 35s expect £21,400.