Prudential has warned that pension savers in their final years of work are worried that they won’t be able to match the living standards of those who have already retired and admit to being jealous of their pensions and their lifestyles.
The insurer found that 50% of those who are in the final 10 years of work before their planned retirement date admit to being jealous of the finances of those who have already stopped work. Meanwhile 54% believe they will be worse off when their time comes to give up work.
To mark the 10th year of its annual Class of… research into the financial plans and aspirations of people planning to retire in the year ahead, Prudential has also this year interviewed a cross section of people who are due to retire in the next 10 years – those who will make up the classes of 2018 to 2027.
63% say the best advice they could give to those who have just started work for the first time is to save as much as they can for as long as they can, and 34% now regret that they didn’t start saving into a pension earlier in their own working life. Meanwhile, 33% simply wish they had saved more for their retirement.
Despite this, 40% believe they will be as financially comfortable as those who are already retired while 6% believe they will actually be better off. And the findings of Prudential’s 10 years of Class of… research back up this optimism – after a massive fall in retirement income expectations after the financial crisis, average expected retirement incomes have been growing steadily since 2013 to the point where people giving up work this year expect to live on an average of £18,100 a year, only £600 off the peak in 2008.
Stan Russell, a retirement spokesperson at Prudential, said: “We’ve seen the retirement incomes of new retirees creeping upwards in the last few years so it’s not all bad news for those planning to give up work in the coming years. However we are also seeing it become far less common for people to retire with generous ‘final-salary’ pensions, so a degree of retirement envy among those still at work is understandable.
“But it is important to remember that for most people it isn’t too late to take action and make a real difference to their quality of life when the time comes to stop work. So even later in their working life most people should benefit from saving as much as possible into their pensions and also ensuring the National Insurance contributions they have made are sufficient to guarantee them the State Pension.
“Pension saving and retirement planning has changed massively over the past 10 years, and retirement is now more of a process than a one-off event. A consultation with a professional financial adviser should help many people make the right decisions about saving while they work and taking an income as they start to wind down.”
Prudential also found that 27% of those who are within 10 years of retirement have been saving into a pension since they started work. However, 16% admit they are not saving into a pension at all, even this close to retirement. Meanwhile, 13% admit to having been unrealistic about the age at which they will be able to afford to retire.