Standard of living expectations get worse closer to retirement

A third of all non-retired UK adults (31%) are expecting their standard of living to slightly decline in retirement, whilst only 12% think that it will improve.  Almost six million (16%) people expect to have a significantly worse standard of living, according to new research from retirement specialist MGM Advantage.

The research indicates that as people approach retirement, the worse they think their standard of living will be.  Indeed, 60% of people aged 45-54 expect their standard of living to decrease as they near retirement, and this rises to 67% for people aged 55-64 years.

MGM Advantage's research also reveals major regional differences with the South-East and Eastern regions featuring the highest percentage of people expecting to have a significantly worse standard of living at 23% compared to just 7% of people in the North East. Almost half (46%) of people in the North-East of England expect their standard of living to be slightly worse in retirement. London ranks as the region that has the highest number of people (21%) expecting a better standard of living in retirement.

Despite having much more leisure time at their disposal, only a third of people (32%) anticipate taking more foreign holidays and one in five (21%) expects to dine out more in retirement.

Aston Goodey, Sales and Marketing Director, MGM Advantage comments, "As these results highlight, a huge number of people are genuinely worried that they will have a worse standard of living when they retire. People who have worked hard all of their lives are now facing the prospect of not having sufficient income to maintain their current lifestyle. They are even expecting to take fewer foreign holidays and dine out less - things that most people look forward to once they have more time on their hands.

"We believe for people approaching retirement to have the best possible chance of maintaining their existing standard of living, they need to take steps to enhance the level of income.  One way to do this is to shop around using the open market option to find the best annuity rate for them. Another way is to select a retirement income product that maintains exposure to the stock markets.  While it does involve some risk, it also has a better chance of generating upside returns, negate the impact of inflation and maintain a comfortable lifestyle."

MGM Advantage believes that a growing number of people will need to keep more of their assets exposed to the markets - with the appropriate level of tailored protection - and that this will fuel strong growth for the asset backed annuity market.

MGM Advantage recently launched a Flexible Income Annuity which gives customers the potential to receive a greater income than through a fixed level conventional annuity. The new product includes the flexibility to change income levels at different stages of retirement and the potential for growth and therefore the potential to negate the impact of inflation. It also provides a minimum income guarantee and death benefits.