Retirement incomes for 2018 hit record high of £19900 - Prudential

This year’s retirees to enjoy record-breaking incomes

This year’s retirees to enjoy record-breaking incomes

Retirement incomes have hit their highest level since the financial crisis after five years of rising income, according to the latest research by Prudential.

London's top FTSE 100 index is at record highs, and Wall Street has repeatedly hit all-time highs before and after massive corporate tax cuts in the U.S., helping to lift the pensions of people on the cusp of retirement.

Prudential said the the introduction of the new flat rate state pension in 2016 will also have boosted people's income, especially if they have paid enough National Insurance to be eligible for the full weekly payout - now £159.55 but due to rise to £164.35 in April.

Meanwhile, traditionally more generous final salary pensions will have a dwindling impact on what people end up living on in retirement. The pension freedoms have created a higher level of risk that savers will exhaust their retirement savings prematurely.

This year's findings revealed almost half (46%) of people planning to retire this year felt they were either not financially well prepared for retirement or were unsure about their preparations.

Last October, the Pensions and Lifetime Savings Association (PLSA) suggested that national retirement income targets were needed to help savers understand whether they are putting away enough money for old age.

The predicted average retirement income of £19,900 a year for 2018 is the highest since Prudential began carrying out its annual survey in 2008. See the table above.

People planning to retire this year are expecting to live on an average annual income of £19,900, compared to just £15,300 in 2013. The 10% rise from a year ago is even more impressive given the economic and political uncertainty savers are having to cope with.

'That uncertainty is however impacting the confidence of almost half of the Class of 2018 who fear they aren't financially well equipped'.

Jeanette Makings, head of financial education at Close Brothers said it was good news that retirement incomes are on the rise, but the number of retirees still feeling financially unprepared is a concern: "With choppy economic waters ahead and inflation rising, it is essential that people make the right choices to ensure financial security in their retirement".

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