New figures show that those approaching retirement are expecting to receive on average £23,700 per year when they retire, broadly equating to just under 50% of their income, pre-retirement.
Would you be happy receiving half your current income in retirement? Studies demonstrate that more can be achieved with setting targets. And even more with the help of a financial adviser.
Everything is on the change
With the UK population now expecting to be in retirement for over 20 years, priorities are changing and people want to know that they are going to be financially secure and able to fulfil their dreams when they finish working.
Doctors and Dentists are fortunate that their profession generally provides excess income each month to support a decent retirement plan. However, variables do apply and planning still needs to take place to maximise returns.
Retirement Income Uncovered Report
Highly valuable research was conducted in July 2014 regarding retirement planning. Over 1,500 people aged between 50 and 75 took part in the study and questions were aimed at gaining a better understanding of attitudes, expectations and requirements of those both in retirement and those approaching this milestone in their lives.
Average retirement income
The study indicated that the current average retirement income is £19,000 with 41% of retirees actually earning less than £15,000 per annum.
Those approaching retirement are expecting, and, would be satisfied with broadly 50% of their pre-retirement income, which would result in approximately £23,700 per year.
This reflects a 20% shortfall between reality and expectation.
There is also currently a £7,000 difference between the average retirement income for a man and that for a woman, as detailed in the report.
Planning pays off
Setting goals is important to track performance of a retirement plan.
Those retirees who set goals for how much income they wanted to receive in retirement are 63% more satisfied when they get there and earn on average over £150,000 in additional income over the course of an average retirement.
Pensions versus other means of income
Pensions are of course one of the obvious means of obtaining an income in retirement but other factors are also being considered in more detail too.
For example, people who have already retired only allocated 2% of the “retirement pot” contribution to downsizing their property, compared to an increasing 15% who have not yet reached retirement.
Use our Pension Cost Calculator to see what you should be contributing to get the return you desire for your retirement.
Double the chance of setting a retirement target
Using a financial advisor, according to the study, doubles the chance of setting a retirement target and can make a significant difference to the level of retirement income received. The average income when using a financial adviser is £26,000 but can of course be a lot more, depending on your current income, lifestyle and the target you set.
A financial adviser will also help explain the many different types of retirement income, for example, how pension drawdown works – currently only 17% have a good understanding of this despite all it’s attention in the media in recent months.