People in the UK who are planning to retire during 2008 are likely to face their later years earning a lower-than-average annual income, a new study has revealed. Research carried out by Prudential found that adults retiring this year will live off an average income of £18,663 a year, which is £5,000 less that the average income for a working adult.
Women are likely to have to survive on less each year than men, the findings show, with an average income of £11,291 compared to the male average of £20,790. Some 46 per cent of this year's retirees surveyed, however, said that they expected to have a comfortable retirement funded by state and work pensions and savings.
For 36 per cent these financial provisions were not considered to be enough to retire in comfort, while 18 per cent weren't sure.
Gary Shaughnessy from Prudential pointed out that the demise of many final salary pension schemes would mean retirement incomes were reduced and added that it was “worrying" that just 24 per cent of those polled had sought financial advice.
Even those prospective retirees who have made plans for the future could be missing out on some pension benefits, according to another study.
Research from Lincoln Financial Group revealed that 1.8 million savers in the UK have staked their future income on the stock market, rather than in long-term pensions. Some 26 per cent of people aged over 55 found by the poll to have invested in shares see such concerns as an alternative to a pension and 21 per cent would up their investment even in the face of recent economic instability. Simon O'Connor from the firm said that the tax advantages offered by long-term pensions saving alone can make this option worthwhile.
The Prudential report also highlighted the importance of seeking advice when making financial plans for the future. Inflation increases, as well as the increasing life expectancy of people in the UK, mean that the pension provision people do make - whether in pensions products, savings or investments - may need to last a long time. Mr Shaughnessy pointed out the potential tax breaks available that are often not utilised by savers, and added that diversifying savings across pensions, mortgages and investments with the aid of financial advice can help people get the most from the money over the long-term.
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