Provider Prudential found retirees expect to be retiring on an average income of £19,900 a year in 2018.
This means they expect an income 10 per cent more than those who gave up work in 2017, whose average expected annual retirement income was £18,100.
The provider said this was predominantly due to to the prevailing bull market, which meant people had more money in their pension and Isa products.
Vince Smith-Hughes, retirement income expert at Prudential, said: "We think what has been happening is people are seeing money increase in their pensions and savings pots, which is what has made them [expect the higher incomes].
"We also wonder whether people are looking at the new state pension and are thinking that's giving them a higher income as well."
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.Auto-enrolment could also start to impact the figures in the future, he added.
Mr Smith-Hughes said the there was a danger people were overestimating their income from the state pension, which was introduced in 2016, as not everyone might be eligible for the full amount.
Nevertheless, he said the research was representative because of the large number of people polled.
Prudential had questioned 9.896 non-retired UK adults aged 45 plus, including 1,000 planning to retire in 2018, in the period between 29 November and 11 December 2017.
Prudential's research has tracked retirement trends for the past 10 years and has detected a gradual increase in expected income levels in the five consecutive years since 2013.
From 2008 to that point expected incomes had fallen from £18,700 to £15,300, now they are £1,200 greater than at the time of the financial crisis.
Mr Smith-Hughes 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."
CLASS OF | EXPECTED INCOME |
2008 | £18,700 |
2009 | £17,800 |
2010 | £16,500 |
2011 | £16,600 |
2012 | £15,500 |
2013 | £15,300 |
2014 | £15,800 |
2015 | £17,000 |
2016 | £17,700 |
2017 | £18,100 |
2018 | £19,900 |
The past decade has seen some of the biggest changes to pensions in generations as well as major political and economic upheavals and Prudential said there are signs uncertainty may be hitting confidence despite rising incomes.
It said despite the record increase, this year’s findings showed almost half (46 per cent) of people planning to retire felt they were either not financially well prepared for retirement or unsure about their preparations.
A mere half of people questioned (50 per cent) believed their expected income would enable them to have a comfortable retirement, while 27 per cent believed they did not have enough money for retirement.
Mr Smith-Hughes said: “That uncertainty is 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 he said the message remained 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 in your working life."
Jeanette Makings, head of financial education at Close Brothers, said it was good news retirement incomes were deemed to be on the increase, but the financial unpreparedness highlighted was "hugely concerning".
"With choppy economic waters ahead and inflation rising, it is essential that people make the right choices to ensure financial security in their retirement," she said.
Ms Makings said it was down to employers to educate their staff early on financial needs and where to go for advice.
"Ideally, financial education should start as early as possible, empowering people to get into good savings habits.
"This means that when employees finally get to retirement, they are both financially confident and prepared," she said.
Cleona Lira, IFA at 2plan Wealth Management, said more needed to be done to rouse up enthusiasm about financial planning and financial literacy.
She said: "Most people are ill prepared for retirement or understand very little about their plan. They may know in very general terms if they are in a defined benefit scheme for example, that it is a good scheme.
"Most people though will take an active interest once they know what to look out for and it is easy to transfer this enthusiasm across," she added.
carmen.reichman@ft.com
