The amount of cash retirees are expecting to live on once they have stopped work has reached an all time low. According to Prudential’s Class of 2012 study, pensioners now expect they will have to survive on £15,500 which is 16% lower than the figure recorded in 2008. Less than 40% of those questioned thought they would be financially secure in retirement, with 20% predicting they will have less than £10,000 to live on.
The fall in incomes can be attributed to a fall in annuity rates. They fell 8% in 2011, which is the fourth year in a row they have fallen. In the mid 1990’s rates were around 15% but now they are less than 7% for a standard level annuity. There is also a North/South divide with people in London suggesting they will have £17,900 per year to live on whereas people in Yorkshire and Humberisde think they will have to live on £12,800.
Overall it appears men are more positive about their retirement income than women, but it seems that there is a substantial majority of people who have no idea how much they will have to live on and are waiting to see what happens when they retire. A recent report from Aviva showed that 37% of over 55’s have no concrete financial plans for retirement.
Vince Smith-Hughes form Prudential says that there is the dual problem of falling incomes and rising prices. He said that… “…the current economic climate has created the perfect storm for people in the run up to retirement … It is concerning that expected retirement incomes are going down, while pensioner expenditure is going up.”
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