Top Retirement News

Derin Clark

Derin Clark

Online Reporter
Published: 17/10/2019

In order for workers to enjoy a comfortable retirement that includes holidays abroad, a generous clothing allowance and a car they will need to have saved enough for a £33,000 per year income.  

According to research carried out by Loughborough University and the Pensions and Lifetime Savings Association (PLSA), workers who only manage to save enough for a retirement income that provides them with £10,200 a year (£15,700 for couples) will achieve a minimum living standard, those who managed to save enough for £20,200 a year (£29,100 for couples) will be able to live a moderate lifestyle during retirement and those who are able to save enough for £33,000 a year (£47,500 for couples) will be able to enjoy a comfortable retirement.

The study took all aspects of people’s lifestyles into account when deciding what constituted as a minimum, moderate and comfortable retirement lifestyle. The report found that a minimum living standard will enable a single retiree to spend £38 per week on a food shop, have a one week holiday and a long weekend in the UK per year, will not be able to afford a car and will have £460 per year for clothing and footwear.

A single person able to afford a moderate retirement will be able to spend £46 on a food shop each week, enjoy two weeks in Europe and a long weekend in the UK each year, and will have £750 to spend on clothing and footwear each year.

Meanwhile, a single person enjoying a comfortable retirement will be able to spend £56 per week on their food shop, enjoy three weeks in Europe every year and spend £1,000-£1,500 on clothing and footwear each year.

British workers are underestimating their life expectancy resulting in them not saving enough for their retirement, new research by Scottish Widows reveals.

According to Scottish Widows, the average adult expects to live until they are 82 and retire at 65, however the average life expectancy of UK adults saving for retirement is in fact 87 years. The five extra years could require an additional £80,000 in pension savings.

In addition to this, those heading towards retirement have no plans in place about how they will fund their retirement, with one in 10 (10%) over-50s not knowing how they will fund their income while 28% fear running out of money in retirement. Furthermore, among over-50s who are not retired and do not have a defined benefit pension, only 9% plan to buy a product that provides a secure income for life, such as an annuity.

Those nearing retirement should have a clear plan in place on how they will fund their retirement years and, ideally, speak to an independent financial advisor to ensure they make the best choices for their later years.

A recent survey by Nationwide Building Society reveals that only a third of over-55s plan to move to a smaller property in retirement. Just 36% of the 2006 adults aged 55 or over said that downsizing was an option, while more than two-fifths (43%) said that they never plan to move again.

The survey found that needing the space was the main reason for 49% of respondents’ decision not to move, with the need to host family, store a lifetime’s worth of possessions and even room to pursue their hobbies among the reasons given.

Furthermore, 43% of the over-55s polled revealed that where they’d put down roots was important and that they didn’t want to leave their home location, while 18% said that being based near family was a good reason to stay.

Annuity rates are at their lowest point in the product’s history, with income payable falling by over 10% since the beginning of the year, research from Moneyfacts.co.uk reveals.

Analysis of data on the average annual pension annuity income shows that while it has been declining throughout 2019 there has been a rapid fall since August 2019 on the back of a sharp fall in gilt yields. This latest drop in annuity rates means that average annual annuity pension income is now 1.2% lower than its previous all-time low back in September 2016 for a £10,000 purchase price.

Moneyfacts.co.uk has looked at the average annual income payable on a single life standard level without guarantee annuity for a 65-year old and found that the income has fallen by between 12.3% and 12.5% (depending on the purchased price) since the start of the year. For an equivalent enhanced annuity, the reduction is between 10.2% and 11.4%.

Falling average annual pension annuity income since the start of 2019

 

Average single life standard annual annuity income

Age 65 (£10,000 purchase price)

Average single life standard annual annuity income

Age 65 (£50,000 purchase price)

1 Jan 2019 £468 £2,557
10 Sep 2019 £410 £2,237
% change -12.3% -12.5%

Figures show gross annual annuity income payable monthly in advance. Figures based on an annuitant age 65 buying a single life level without guarantee annuity. 

Falling average annual pension annuity income since the start of 2019

 

Average single life enhanced annual annuity income

Age 65 (£10,000 purchase price)

Average single life enhanced annual annuity income

Age 65 (£50,000 purchase price)

1 Jan 2019 £529 £2,701
10 Sept 2019 £475 £2,393
% change -10.2% -11.4%

Figures show gross annual annuity income payable monthly in advance. Figures based on an annuitant aged 65 buying a single life level without guarantee annuity. 

People in the UK are feeling slightly more confident about their ability to retire comfortably than they did two years ago, research from Aegon reveals.

According to Aegon, just over half (52%) of people it surveyed now feel confident about their ability to retire comfortably, compared to just under a half (48%) in 2017. Saying this, one in 10 (10%) of those surveyed admitted that they don’t have any pension savings, while a quarter (25%) of those with pension savings said that they don’t know how much they hold in pensions.

In addition to this, 36% of those surveyed have never estimated their income needs for retirement, which while down from 43% in 2017, Aegon believes still needs to be reduced further to lower the number of people putting themselves at significant risk of being unable to maintain their existing lifestyle during retirement.

Steven Cameron, pensions director at Aegon, said: “It’s encouraging to see an indication of growing confidence over the last two years when it comes to being able to retire comfortably.

“Pensions have frequently hit the news headlines in the last few years. While at times this has been for less good reasons, there have been lots of positive stories such as the success of automatic enrolment and the new retirement flexibilities under pension freedoms, which have been built on by initiatives such as the Pensions Awareness campaign from Pension Geeks. All of this has contributed to raising the profile of retirement planning, leading to people taking more interest and action, improving the confidence people have when it comes to being able to retire comfortably.

“But we must remain realistic. Overconfidence carries risks and people mustn’t be lulled into a false sense of security. While auto-enrolment means millions of employees are saving more for retirement, that doesn’t mean they’re on target for the retirement they aspire to or to maintain their pre-retirement standard of living. Furthermore, the growing population of self-employed are excluded from auto-enrolment and can’t rely on an employer to support their retirement funding. Realistically, there’s a lot more required to make sure you’ve saved enough for the retirement you would like.

“It’s also worrying that a significant minority of people don’t know how much they have in their pension. Those in the 30 to 54 age band are in the best position to take action now to make a big difference to their retirement income. Whatever your age or circumstances, finding out more about your pension funds and prospects can only be a good thing.”

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