Potential pensioners face debt pitfall
By Declan Murray in Debt, Debt Advice Blog on 18 January 2012
People who wish to retire in 2012 face a massive reduction in their incomes compared to the last four years.
Research from Prudential, the leading insurance company, found that the average annual retirement income has dropped by 16% since 2008 to just £15,500 per year.
The high cost of living and the harsh bite of inflation has left a staggering one in five people expecting to retire on less than £10,000.
Fewer than two in five expect to be ‘financially comfortable’ in retirement, the survey found.
Vince Smith-Hughes, Prudential’s retirement income expert, said; “The current economic climate has created the perfect storm for people in the run up to retirement. The impact of the credit crunch, banking crisis, recession, and concerns over the Euro-zone, has been reflected in the fact that expected retirement income levels have hit a five-year-low.”
“For those who are still working, it has never been a more important time to save into a pension. The longer that savings are invested in a retirement pot, the greater the opportunity they will have to grow,” continued Mr Smith-Hughes.
Londoners have the highest average expected retirement income at £17,900, while those in Yorkshire and Humberside have the lowest at just £12,800.
Many may have to work for longer or seek other means of income to fund their activities later in life. Annuity rates have fallen by a massive 8% over the past 12 months and this has had a huge impact on the value of pensions in a private pension fund.
Rising debt
Millions of Brits entering retirement face a tough time as the cost of living becomes extortionate. Those with private pensions could feel the pinch as they get older.
Many who are struggling to cope are resorting to using loans or credit to simply get by each day. This could put pensioners at risk of serious debt problems.
