PENSIONERS in the West Midlands’ expected retirement incomes have fallen for the second consecutive year, according to new research from Prudential.
The average income for someone retiring in the West Midlands this year is £12,500 - £400 lower than in 2012, when retirees expected £12,900 - the lowest of all UK regions.
Across the UK, expected retirement incomes have fallen for the second consecutive year to £15,300, according to the insurer’s sixth annual “Class of” study, which tracks the future plans and aspirations of people entering retirement.
According to the research, expected retirement incomes have fallen in four of the past five years and are now £3,400 lower than they were in 2008, when a typical person entering retirement anticipated an annual income of £18,700.
The real-term fall in incomes is even higher, due to rises in living costs. Since 2008, inflation has caused prices to rise by 14.7 per cent.
Someone who retired last year would, therefore, need an annual income of £21,400 to have the same buying power as an average person entering retirement in 2008.
Vince Smith Hughes, retirement specialist at Prudential, said: “People entering retirement this year are continuing to feel the squeeze as their expected incomes have fallen for the fourth time in five years, to a new low.
“The continuing trend is even more concerning, when you consider that rising inflation is eroding pensioners’ spending power in real terms.
“Wherever possible, people entering retirement should consult a financial adviser or retirement specialist, who will be able to talk them through all of the retirement income options available to them.
“It can be tempting to go for whatever product offers the highest initial income but this might not be the best value in the long run, as it could leave dependents at risk or fail to protect you against rising living costs.
“Those who are still working should think about saving as much as possible, as early as possible, to give themselves the best chance of building up a decent pension pot to help to ensure a comfortable retirement.”