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Tuesday, 07 July 2015

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‘Perfect’ pension storm

People retiring this year expect to receive £3,000 a year less than those who retired in 2008, a study from Prudential has found.

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Easy does it: But people expecting to retire in 2012 are finding out that their incomes in retirement have fallen compared to previous years

The typical retirement income anticipated for 2012 has hit a five-year low of £15,500 against the tough economic backdrop, while one in five of those retiring this year expects to have to get by on less than £10,000.

The survey has been carried out each year since 2008, when people on the brink of retirement looked forward to a yearly income of around £18,600, including private, company and state pensions, a figure which has fallen by more than 16 per cent compared with 2012.

Less than half (37 per cent) of the “class of 2012” believe they have saved enough to secure a comfortable retirement, with men tending to be more optimistic than women.

Pensioners and those approaching retirement have been hit by high living costs, including soaring fuel bills, at a time when their savings pots have struggled to make real returns, as the Bank of England keeps the base rate at a historic 0.5 per cent low.

Vince Smith-Hughes, head of business development at Prudential, said: “The current economic climate has created the perfect storm for people in the run-up to retirement.

“The impact of the credit crunch, banking crisis, recession and concerns over the eurozone has been reflected in the fact that expected retirement income levels have hit a five-year-low.

“It is concerning that expected retirement incomes are going down, while pensioner expenditure is going up.”

Expected retirement incomes have been on a downward slide since the study began, apart from last year when people were planning to retire on £16,600 annually – £100 a year more than in 2010. The Prudential survey also revealed marked regional differences in anticipated retirement incomes of more than £5,000.

Londoners retiring this year have the highest typical expected incomes of £17,900, while those in Yorkshire and Humberside have the lowest at £12,800.

The study took into account 1,003 people who are retiring in 2012.


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