Posted on: 20th April 2018
New research has found that one-in-eight (12 per cent) of people retiring this year haven’t made [a single] provision for their. This figure includes 10 per cent of those who are either partially, or entirely, relying on the state as their only source of annual income.
The class of 2018 study conducted by Prudential, which is now in its 11th year, demonstrated that the number of people who are retiring without a pension has dropped by 14 per cent this year, compared to 2017. This is also nearly half of the 23 per cent recorded back in 2008.
The state pension isn’t enough
Prudential believes anyone retiring without pension savings will do so with an annual income £1,452 lower than the minimum income standard set by the Joseph Rowntree Foundation.
The 10 per cent who are relying, either partially or entirely, on the state pension will receive £164.35 a week, or just over £8,500 as an annual income. According to the Joseph Rowntree Foundation, the minimum amount that is required for a sustainable lifestyle is £192.27 per week. Those who rely solely on the state pension will have £27.92 less to get by each week.
The gender pension gap
Research suggests women are likely to have no pension income whatsoever. Nearly one in five (18 per cent) are predicted to retire without a pension, more than double the 7 per cent of men, although this gap is getting narrower as time goes by. However, this is still lower than the figures from 2016 which showed that 22 per cent of women had no savings, compared to7 per cent of men. In the 2008 study, 32 per cent of individuals had said to have planned their retirement without a pension.
Prudential’s research shows that 42 per cent of people planning to retire with a pension this year have most of their investments in a workplace or final salary scheme. What’s more, over one in eight 13 per cent have savings in a personal pension outside of employment, whilst one in eight have most of their savings in a workplace defined contribution scheme.
Still more to be done
Prudential retirement income expert, Stan Russell, said:
“The long-term trend for the number of people retiring without a pension is down and that is good news. But there is still some distance to go and it is worrying so many people will be entirely reliant on the state pension for their income in retirement.”
“While the Stateis an important part of retirement income, it shouldn’t be the only part, and those still in work should, if possible, be contributing and saving towards their retirement. It is never too early to start saving into a pension and even a small amount each month can make a difference and help from a professional financial adviser can be invaluable in helping plan for retirement.”
When it comes to planning for retirement, having a scheme in place is key for living as comfortably as possible. Though it may seem daunting, having an independent financial advisor can help you to understand your investments and help you to build a guide you in creating a tailored financial plan that will work for you in retirement. If you need help and advice, talk to the experts. Contacttoday for a free consultation to see what we can do to help you get ready for retirement.