A new high for retirement income

Higher incomes People stopping work in 2019 expect to be £1,800 a year better off than last year's cohort

Higher incomes People stopping work in 2019 expect to be £1,800 a year better off than last year's cohort

The life firm's research said average retirement incomes have risen consistently since 2013, when they were £15,300.

And those stopping work in 2018 expect to be £1,800 a year better off than last year's cohort, according to a nationwide survey of 1,000 people by Prudential.

Prudential said the the introduction of the new flat rate state pension in 2016 will also have boosted people's income, especially if they have paid enough National Insurance to be eligible for the full weekly payout - now £159.55 but due to rise to £164.35 in April.

But while the future may be bright for today's retirees, one pensions expert says more needs to be done to educate younger people about the importance of saving for retirement.

Private sector employers have phased them out in favour of stingier defined contribution pensions, where savers bear all the market risk when building retirement pots.

This year's findings revealed almost half (46%) of people planning to retire this year felt they were either not financially well prepared for retirement or were unsure about their preparations. That said, half believe their expected income will enable them to have comfortable retirement, but 27% believe they do not have enough money for retirement.

Prudential's annual study is now in its eleventh year and showed that expected incomes have passed their pre-financial crisis levels - £1,200 higher than the £18,700 expected in 2008. See the table above.

People planning to retire this year can expect to live off a record average annual income of £19,900 - a tenth (10%) more than those who retired in 2017 - research from Prudential has found. The 10% rise from past year is even more impressive given the economic and political uncertainty that savers are having to cope with.

Vince Smith-Hughes of Prudential pointed out that the 10% rise is particularly impressive considering the current economic and political uncertainty, but that this uncertainty is also "impacting the confidence of almost half of the Class of 2018 who fear they aren't financially well equipped". For many a consultation with a professional financial adviser, both when saving into a pension and considering the income options at retirement, could be a major help.

'But there is still more to do to ensure that everyone is building up good private pension savings, which is why we are increasing automatic enrolment contributions in April 2018 and April 2019 and have just announced a package of measures to ensure that even more people benefit from a workplace pension'.

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