Prudential has tracked and analysed the impact of the revolutionary changes to pensions that came into force during 2015. By using its specially commissioned research and publically available data it has built a detailed picture of the latest developments in attitudes to planning and saving for retirement. Highlights of Prudential’s findings include:
The best places to retire
Devon was ranked number one county for pensioner wellbeing, narrowly ahead of Dorset, Powys, Norfolk and East Sussex.
Retirement income – the Class of 2015
• The expected average retirement income for people stopping work in 2015 was at a six-year high of £17,000 – £1,200 and 8% higher than in 2014.
• But the retirement gender gap is £4,800 – women retiring in 2015 had an average annual expected income of £14,300 compared with £19,100 for men – leaving women 25% worse off than their male counterparts.
• More than one in seven (15%) people retiring in 2015 had no pension savings and 16% had retirement incomes of less than £9,500.
• Women were more than twice as likely to be relying solely on the State Pension than men – 21% of women compared with 9% of men had no pension savings.
• A third of people retiring this year felt more positive about their future because of pension freedoms.
Finances in retirement
• Around one in five (19%) people retiring this year did so with debts, owing an average of £21,800.
• More than a third (36%) of people retiring this year provide financial support to their families, with the average pay out at £3,000 a year.
• But 29% expect to leave inheritances to their families, with an average expected windfall of £190,600.
• The average retired household pays £6,500 a year in direct and indirect tax – enough to buy a brand new Dacia Sandero car. A total of more than £47 billion is paid by pensioners to the exchequer each year.
Planning for (and saving for) retirement
• Around a third of people retiring in 2015 have never taken financial advice.
• The new pension freedoms prompted 32% of this year’s retirees to take professional financial advice.
• One in five couples over the age of 40 have never discussed their retirement planning together.
• Divorce is likely to cost you later in life – retirement income is £2,100 lower for those who have been divorced.
• Remember your pension if you work for yourself – just 9% of self-employed workers are paying into personal pensions.
• More than a fifth (21%) of 2015’s retirees say they don’t feel ready to stop working altogether.
And finally… someday some of us will be millionaires
The average worker will be 56 and a half by the time they earn their first million. Women will have to work to 69 years, seven months and three weeks to achieve the milestone, compared with 50 years, eight months and three weeks for men.