Retirees this year expecting to live on an average annual income of £19,900
What level of income do you think you might live on once you’ve retired? Does an income just shy of £20,000 sound as though it might be enough?
Research published by insurers Prudential on the 12th of January 2018 revealed that the average annual retirement income for those leaving work this year is an estimated £19,900.
The news – and the average level of retirement incomes – drew mixed reactions from those most likely to be affected:
- on a positive note, expected pension incomes continue to rise – those who are retiring this year may expect an average income approximately 10% higher than those who retired in 2017;
- five successive years of increases have seen the annual average retirement income rise to the figure of £19,900 a year – the highest it has ever been since Prudential began recording it in 2008;
- putting that figure into further perspective, however, is the fact that the current average expected income is only £1,200 above the £18,700 a year recorded before the financial crash in 2008;
- during that same 10-year period, the cost of living has risen by 29.4%, according to an online calculator of the effects of inflation in the UK – meaning that a retirement income of £24,196.18 would be needed to have the same purchasing power as £18,700 in 2008;
- it comes as something of a surprise, therefore, that 50% of those surveyed said they were confident that their expected income is going to provide a comfortable retirement, whilst only 27% believe that it will be insufficient;
- more telling, perhaps, is the 46% who reported that when they retire during the course of 2018, they are likely to have made insufficient financial planning for the years ahead or are uncertain whether they have done enough to make the most of their pension income.
In a report commenting on the survey’s findings on the 12th of January 2018, the Independent newspaper identified one of the principal lessons as trying to save as much as possible, as early as possible in your working life, if you want to enjoy a financially secure and stress-free retirement.
As many of us may know, it is all too easy to miss that particular boat – no significant attempt at saving really took off in our youth.
But it’s never too late for financial planning – for making sure that you have the appropriate pension scheme working on your behalf when you take those final steps towards retirement. That means understanding exactly what pension arrangements you may have made throughout your working life, how they may be optimised for maximum benefit and whether you may exercise your rights to transfer any pension benefits – to an alternative pension scheme, for example.
Once you have assembled all the relevant information on your current pension status, therefore, you might investigate whether your position may be improved by:
- reducing the charges on your current pension arrangements;
- improving the yield on the investments currently made using your pension fund;
- embarking on a regular, scheduled review of your current pension plan;
- making additional contributions to your pension schemes; and
- the implications for deferring the date of your retirement.
These are just some of the options that might be revealed in the retirement planning services we offer here at Independent Pension Specialists Limited (IPSL).
Our aim is to help you make the most of whatever pension pot you have accumulated – or hope to have accumulated by the time you retire – and ensure that it is working its hardest to return the retirement income to make your life as comfortable and as stress-free as possible.
To that end, we’ll ask you some searching questions, some of which you might not have dared ask yourself, but all of which may help to reveal how to make your personal pension pot work in a way to satisfy your unique needs and circumstances. Some of those questions might include:
- how much income you believe you are going to need when you reach retirement age – irrespective of the average retirement income calculated by the likes of Prudential’s annual surveys;
- at what age are you planning to retire;
- how long are you likely to need the income you identified and whether that amount may change over time;
- how are your personal circumstances likely to change during the course of your retirement;
- what are some of the principal ways you intend to spend your retirement years – what lifestyle choices are you likely to make;
- what about your entitlement to a State pension – how do you propose to ensure that it, too, continues to work in your best interests;
- what manner of financial protection do you intend to provide for your family; and
- is there any other investment income upon which you may draw.
On the basis of your answers to these – and similar – questions, we may help you devise the optimum pension plan to help ensure that all available options and choices remain yours to make throughout your retirement.