We'd all like to think that we'll be enjoying a comfortable standard of living in later life, and happily, research from Prudential shows that retirement incomes are on the up! This year, those set to retire are expected to live on an annual income of £18,100, the highest figure since 2008 and the fourth consecutive annual rise.
It's an impressive £400 higher than last year – those who retired in 2016 expected an average annual income of £17,700 – and well above the low point of 2013, when retirees received an average of just £15,300. Nonetheless, it's still some way below the peak of £18,700 received by retirees in 2008, which shows that, while retirement incomes have definitely picked up over the last few years, there's still room for improvement.
Indeed, 45% of those planning to retire this year said they feel that they're either not financially well prepared for retirement or are unsure about their preparations, highlighting the need for people to think carefully – and well in advance – about how they'll approach retirement.
"The continued growth in retirement incomes is something that I'm sure will be welcomed by everyone planning to retire this year," said Kirsty Anderson, a retirement income expert at Prudential, "however it is striking that the expected income of people who retired at the height of the financial crisis was higher than for those who are giving up work in 2017; we're still playing catch up 10 years later.
"We are also seeing a degree of uncertainty from retirees about whether the amount they've saved will leave them financially prepared for the years ahead … Today, as in 2008, the message for people looking to make their retirement as financially comfortable as possible should be to try to save as much as possible from as early as possible in their working lives."
Start saving! Even if you're decades away from retirement, it's never too early to start. Hopefully you'll be enrolled in a workplace pension – if you're not yet, auto-enrolment means you soon will be – but it wouldn't hurt to save elsewhere as well. An ISA could be a great place to start.
Are you getting closer to retirement age? If so, it's time to start thinking about how you'll spend your pension pot. Speak to our no obligation annuity planning service to get an idea of your options.
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