The importance of saving for a pension is being continually drummed into us at the moment, but did you know that the amount you end up with could be related to where you live in the country?
New research from Fidelity International has revealed stark differences in retirement incomes according to location, with these regional incomes varying by as much as £12,000. Scotland was found to be worst off in this respect, with households expecting to receive an annual income of £18,334 in retirement – almost £6,000 less than the average household income of £24,058 in England, and £12,000 less than the highest average of £30,001 in London.
Given that those in London typically have higher incomes, it's perhaps no wonder that their retirement income is set to be similarly high, with it sharply contrasting with the UK national average of £21,592. Those in the East of England are also well above average with typical retirement incomes of £26,364, while the South can enjoy £24,268 per year. At the other end of the scale, the Midlands fares only marginally better than Scotland with an expected annual income of £18,462, while the North clocks in at £21,177.
The calculations take into account the income derived from workplace pension savings, the state pension and other investments, and clearly highlight the regional differences in terms of saving and pension attitudes: "[The data] reveals a marked divide in what income people expect to receive in retirement," said Richard Parkin, head of Retirement at Fidelity International, and although he points out that these differences need to be balanced against the average cost of living for a particular area, "a £12,000 difference between the top and bottom of the table is significant".
"With the pension freedoms opening up even more options to retirees of how they take their income, it is important that we get people to engage with any potential income shortfalls," he added. "The building blocks of any good retirement plan are first to make sure all essential expenses are covered by guaranteed income; be it from a final salary scheme, your state pension or an annuity. After that, you can start to use your additional monies with a view to generating income for more fun pursuits.
"Retirees must bear in mind though that retirement decisions are complex and often irreversible. If you are in any doubt, you should always seek expert guidance or advice."
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