Pensioners ‘still playing catch-up’ on pre-crisis expectations

Retirement hopes
Retirement hopes

People retiring in 2016 expect to be around £700 a year better off than those whose careers ended in 2015, a report has found.

On average, people retiring this year expect to receive an annual income of £17,700 - marking the third annual increase in a row - according to research from Prudential.

People retiring in 2015 typically expected to have £17,000 to live on. The figures are made up of how much money people think they will have coming in a year from all their pensions, including the state pension, as well as from any savings or investments.

Despite the increase, those retiring this year still expect to get about £1,000 a year less than those who planned to retire in 2008, when the typical sum was £18,700.

The research also suggests that the new pension freedoms introduced in April 2015 have helped boost people’s retirement confidence.

The freedoms give people aged 55 and over more flexibility to take their pension pot how they wish, rather than being required to buy a retirement income called an annuity.

They have been controversial in recent years due to plunging rates and concerns that people fail to shop around for the best deal.

Prudential found more than half (56%) of people retiring in 2016 felt well-prepared for their retirement, up from 54% last year.

The research, carried out among 1,000 people planning to retire in 2016, also found significant regional variations - with London retirees’ income expectations slipping back significantly compared to a year ago.

“Pensioners are however still playing catch-up with the expectations of those who retired before the financial crisis.”