Britons downsizing their retirement expectations, Pru reveals

POSTED: 10th January 2013
IN: Personal News

Current financial conditions and the effects of inflation appear to be driving down people's expectations of the amount of income they will receive in retirement.

undefinedThe Class of 2013 study from Prudential revealed average expected retirement incomes in the UK have fallen £200 in 12 months to just £15,300 per year.

Research Plus conducted a survey of 8,676 non-retired Britons on behalf of the insurer, discovering that expected retirement incomes have declined in four out of the past five years.

In fact, people now expect to receive £3,400 less per year in retirement than they did ahead of the recession in 2008, when they anticipated enjoying a pot of £18,700.

As Prudential points out, the real-term fall in incomes is even higher because of the increases in living costs, so someone who retired in 2012 would need an annual income of £21,400 to have the same purchasing power as a retiree in 2008. 

Retirement expert at Prudential Vince Smith Hughes claimed the continuing trend is even more worrying when you consider that rising inflation is hurting pensioners' spending power in real-terms.

As such, he advised those looking to the future to begin saving sooner rather than later, which will help set them up for later life costs like care. 

Mr Hughes said: "Those who are still working should think about saving as much as possible as early as possible, to give themselves the best chance of building up a decent pension pot to help ensure a comfortable retirement."

A Variable Cash ISA from Aldermore could help those planning ahead to get on top of their savings so they are better prepared for the day when they retire.

Tax-free savings are an excellent way to make the most of a pot and offer people the chance to build their funds over time while benefitting from the Bank's great rates.  

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