UK pension crisis far from over
It also reveals a significant gender split, with men expecting to retire on an average annual income of £20,790, while women expect around half that, with an average retirement income of just £11,291, around £12,000 a year less than the average income for UK adults.
Gary Shaughnessy, Managing Director of Prudential Retail Life & Pensions said: “These figures confirm the UK’s pension crisis is far from over, and those retiring this year will have to survive on considerably less money than the average UK adult. This is bound to get worse as fewer people approach retirement with the benefit of a final salary occupational pension scheme.”
Rather worryingly, less than half (46 per cent) of those planning to retire in 2008 said they believed their pension (including state and occupational schemes) and savings would provide sufficient income to enjoy a comfortable lifestyle, with more than one in three (36 per cent) believing it would not, and 18 per cent were unsure.
While this clearly presents financial advisers with an opportunity to help consumers address their retirement income needs, the survey also found that only 24 per cent of those retiring this year had gone to a financial adviser as their main source of advice.
Gary Shaughnessy, continued: “It is absolutely critical that people seek professional independent financial advice when planning retirement, and the fact that just 24 per cent of those we polled had done so is worrying.”
The latest findings from the research study revealed that the average age of a man retiring in 2008 is 60 years old, while women say they plan to retire at an average age of 58, compared to statutory retirement ages of 65 and 60.
The research also showed that more than half (52 per cent) of people retiring this year will do so from final salary schemes, with only 22 per cent quitting work with defined contribution schemes.
Gary Shaughnessy, concluded: “When the effects of inflation and increased longevity are taken into account, many of those retiring this year will find their retirement income becomes more stretched as they get older.
“To counter this, it is vital that people take time when considering their retirement income options. Often people feel that it is too late to make a difference, but that’s not the case. There are tax breaks leading up to retirement that many people fail to utilise. They should also remember that while annuities are a foundation for most retirement income, other sources such as lifetime mortgages, as well as using additional savings and investments can be considered to ensure that retirement income is maximised for the long term.”