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Today’s workers expect to retire well before they reach State Pension age
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Those still in work expect to live on more than this year’s retirees when they retire
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Future retirees less likely to benefit from final salary pensions and will have to wait longer for their State Pension
Anyone born after 5 April 1978 will have to wait until their 68th birthday before they can start to claim the State Pension2.
However, the under-35s interviewed by Prudential expect, on average, to retire before they are 64 years old. The trend of estimating retirement dates at least four years short of the State Pension age is also visible among both the 35 to 54 and 55 and over age groups.
For people currently aged 35 to 54, their State Pension age will be between 66 and 68 depending on when they were born. However they estimate they will, on average, retire before their 63rd birthday. For those aged 55 and over, the State Pension age will be up to 66 years and seven months, but on average they expect to have retired before they reach 62 years of age.
*Since 2008 Prudential has conducted an annual survey interviewing people planning to retire in the 12 months ahead. This year’s retirees – the Class of 2015 – had an average retirement age of 60 years old.3
Stan Russell, a retirement income expert at Prudential, said: “Although people of all ages are expecting to be able to retire well before State Pension age, life expectancy continues to increase, with the average retirement now lasting nearly 20 years.
“It is important not to underestimate quite how long retirement savings will need to last. Our previous research has shown that the average retiree in 2015 is 60 years old, but I often encourage people born in the 1970s and 80s to be prepared for the fact that they are likely to be working in some form or other until they are much older.”
Many younger people feel they will be able to retire before the State Pension age, which can perhaps be explained by the fact that they estimate retirement income significantly higher than that expected by 2015 retirees.
Prudential’s data released earlier this year highlighted that the average person planning to retire in 2015 expects to have an annual retirement income of £17,000 – 45 per cent of whom will receive their income from a defined benefit (or ‘final salary’) pension scheme, down from 52 per cent in 2008.
Despite the fact that the proportion of people benefiting from generous final salary schemes is falling and will continue to do so, those aged 55 and over in work expect an average annual retirement income of £19,400, 35-54 years olds expect £19,600 and the under 35s expect £21,400.
* This year’s retirees – the Class of 2015 – had an average expected annual retirement income of £17,000 – a three year high.
Stan Russell continued: “It is encouraging to see people feeling so positive about the income they will receive in retirement. Many people look forward to giving up work and doing more of the things they enjoy. However, in a world where fewer people will benefit from generous final salary pensions, and everyone will have to wait longer to receive the State Pension, making plans based on any false financial expectations may lead to problems later in life.
“Regular consultations with a professional financial adviser should help most people set realistic retirement income goals and help achieve them. For people in work the simple approach of saving as much as possible as early as possible is the best way of securing a comfortable retirement.”
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