People retiring in 2018 will have an average income of £19,900 according to new research from Prudential. This is the highest average annual income since the insurance company started its ‘Class of…’ study in 2008.
It is also an increase of 10 per cent on last year, when average retirement incomes reached £18,100 and is £1,200 a year more than the £18,700 expected 10 years ago during the financial crisis.
However, despite Class of 2018 retirees expecting record-breaking incomes, the study found that nearly half (46 per cent) do not feel financially prepared for retirement or are unsure about what they need to do.
Likewise, only half felt that their income was enough for a comfortable retirement with 27 per cent believing that they would not have enough money.
Commenting on the findings, Vince Smith-Hughes, a retirement income expert at Prudential, says: ‘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. The 10 per cent rise from last year is even more impressive given the economic and political uncertainty that savers are having to cope with.
‘That uncertainty is however 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 the message remains 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.’
But while the future may be bright for today’s retirees, one pensions expert says more needs to be done to educate younger people about the importance of saving for retirement.
Peter Bradshaw, national accounts director for retirement planning tool, Pension Monster, comments: ‘Even if today’s retirees can expect a little more income in retirement, many still won’t have enough in their pension pots to enjoy retirement to the full.
‘To avoid missing out on retirement goals, it’s crucial more is done to educate younger people on the importance of saving early on in their careers and keeping track of their funds as they grow.’
This article was originally written by our sister publication Moneywise.
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