The dire state of pension finances of those ready to retire this year is exposed in new research by a leading financial firm.
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One in seven approaching retirement have no pension to rely on other than the state pension, the study by Prudential found.
And 39% of those planning to retire do not know how much the state pension will pay them or wildly overestimate the cash they will receive.
Their retirement planning is made worse when one in six confessed they will retire with average debts of £24,800 and their finances are even more fragile because they are giving money to help out their families.
The financial firm says the average pension pot for someone giving up work this year is £15,800 – but the gender gap means men are a lot better off than women.
Gender gap costs women £128 a week
The average man’s pension is £18,900 a year, while women are getting by on £12,200.
That gap is £6,700 a year – or £128 a week.
Even though women are picking up 35% less a year from their pensions than men, 41% of women told researchers they felt financially well-prepared for retirement.
The report also highlights sources of retirement income:
- 35% comes from a workplace pension
- 35% from the state pension
- 11% from other savings and investments
- 9% from a personal pension
- 5% from a part time job and another 5% from other sources
Where those approaching retirement live also affects their pension savings, says Prudential.
The highest pension expectations are in London, where retirees feel they need £18,400 a year. The gender gap is also the widest, with men paid £14,000 a year more than women.
Sliding gradually into retirement
The picture in the North East is completely different. There, pension expectations are the lowest, with retirees setting their sights on an average £13,900 a year and the gender gap narrows to £3,100.
Fewer retirees in the region have a private pension – 20% compared with just 9% in the North West.
Vince Smith-Hughes, retirement expert at the firm, said: “Retirement income expectations are at their highest for three years, but it’s a worry so many are giving up work and still have to pay off significant debts on a fixed income.
“Our study also revealed the way people retire is changing. Instead of shutting the door on work on their 65th birthday, the process is more gradual and many people are phasing in giving up their jobs.”
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