Average incomes drop a shocking 24% for people aged 65-plus compared to those aged 55 to 64, new research* from innovative retirement income specialist Primetime Retirement shows.
Its nationwide research shows average weekly income for people aged 55 to 64 is around £318 a week after housing costs and tax – the equivalent of £16,532 a year. But for the over-65s average weekly income drops nearly a quarter to around £242 a week – the equivalent to £12,586 a year, the study found.
And the income figure for over-65s is an average – around a third say their weekly income after tax and housing costs is less than £150 a week while 6% admit it is £50 a week or less. However it is not all gloom – one in eight over-65s say they have a weekly income of more than £400 a week after tax and housing costs.
Primetime Retirement, which pioneered the fixed-term annuity in the UK as Living Time, says the research highlights the income precipice facing many people in retirement - and the need for increased flexibility and innovation in retirement income solutions.
Primetime Retirement Marketing Director Stuart Wilson said: “There is a serious reality gap between the incomes people believe they will have in retirement and the incomes they actually achieve.
“Very few people who are working would be able to comfortably absorb a 24% income cut, even if certain outgoings such as mortgage repayments have gone, but that is the unfortunate reality for many in retirement. What makes the situation worse is that most are on fixed incomes with no prospect of income increasing.
“Keeping your options open and retaining some flexibility in retirement is an excellent first step to maximising income throughout retirement.”
Primetime’s research shows the average over-55s have a weekly income of £277 after tax and housing costs equivalent to £14,400 a year with those in the South East the wealthiest with incomes of around £376 a week or £19,552 while people in the North of England on the lowest incomes of £220 a week.
The average 55+ man has a weekly income of £354 – nearly 43% higher than the £202 income of the average woman.
Primetime Retirement has seen strong demand from IFAs and clients as low annuity rates drive interest in alternatives to conventional annuities including fixed-term annuities.
The Primetime Retirement Plan offers advisers and clients a combination of a fixed income for six years which is not affected by age or gender; a Protected Maturity Amount at the end of the six-year term; and the potential for an investment upside. It also offers Value Protection Plus death benefit, a valuable lump sum benefit for those looking to pass on as much of their fund as possible should they die prematurely.
Clients can choose among the Accumulation+ plan aimed at those saving for retirement; the Balanced+ Plan for those seeking an income; the Capital+ Plan for those seeking income and potentially higher growth; and Income+ for those looking for higher income.
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