Future retirees aged 45 to 55 years-old expect to retire on around a fifth less than people retiring in 2015, according to research by Prudential.
The study by the insurance company shows that 45-55 year-olds think they’ll work until they turn 65 and retire on an average annual income of £14,000.
A previous survey by Prudential found that the average 2015 retiree is likely to receive an annual income of £17,000 during retirement.
This is a generational gap of £3,000 which leaves people retiring this year 18% better off than future retirees.
Of the 1,004 45-55 year-olds surveyed:
- 27% believe their pension will provide a comfortable life in retirement – compared to 50% of 2015 retirees
- 70% think they’ll have a lower standard of living than those currently in retirement
- 6% say their standard of living will be better.
The study reveals that many future retirees (49%) have been forced to put their pension contributions on hold, which risks leaving them short of income in retirement. More in 1 in 10 (11%) have stopped saving for more than a decade while a fifth have not made contributions for 3-10 years.
Vince Smith-Hughes, retirement income expert at Prudential, said it is “surprising” that confidence is declining among retirees:
“For most people, starting pension contributions early and continuing these throughout their working life [sic] is the best way to achieve a comfortable standard of living in retirement.
“However it’s not too late for those in their 40s and 50s who are looking to top up their pension pots – for many people this is the time in life when earnings are at their highest, thus providing the best opportunities to save.”