£22,500 is ‘ideal’ retirement income for savers – Canada Life

People approaching their retirements and planning to buy an annuity would ideally require an annual income of £22,500 on average, analysis from Canada Life has indicated.

This ideal income equates to a moderate living standard, according to the PLSA retirement living standards.

For those whose pension values are under £200,000, the average ideal retirement income was £20,000, while for those whose pension is over £200,000, the figure is £28,300. This figure is closer to the comfortable retirement living standard as calculated by the PLSA.

Canada Life’s research, based on a study among 506 UK adults, revealed that pre-retirees were split on whether they expect the same standard of living as they have now when asked about living standards.

The study found that 46% of respondents thought their retirement living standards would remain as today, while 36% said they would get worse. Another 10% of respondents think their living standards will be better in retirement than they are now.

Canada Life also stated that pension values have a significant baring on the positivity towards retirement living standards, with 20% of pre-retirees with pensions valued at over £200,000 saying they think their living standards will be better. This compared to 8% whose pensions are valued at less than £200,000.

However, around one in four (26%) of those with pensions over £200,000 thought their standard of living will fall in retirement, compared to 40% whose pensions are valued at less than £200,000.

“A generation of savers planning their retirements have relatively moderate ambitions for their ideal incomes,” said Canada Life retirement income director, Nick Flynn.

“Far from splashing the cash, the over-55s are seeking an income of around £22,500, which combines both private savings and the state pension of around £9,339 currently. This requires the pension and any other savings to generate an income of around £13,161 a year.

“At current standard annuity rates, a pension of £200,000 could deliver around £10,000 a year guaranteed for life, likely to be more for those who qualify for enhanced rates and a better income because of their health or lifestyle.

“Buying an annuity is a significant financial step and an adviser or annuity broker will be best placed to help understand the choices available.”

    Share Story:

Recent Stories


FREE E-NEWS SIGN UP

Subscribe to our newsletter to receive breaking news and other industry announcements by email.

  Please tick here to confirm you are happy to receive third party promotions from carefully selected partners.


Helping the credit challenged get mortgage ready
A rising number of borrowers are finding it harder to access mortgages due to being credit challenged - whether that’s from historic debts, a county court judgment, or having little to no credit history.

In the latest episode of the Mortgage Insider podcast, Phil Spencer is joined by Eloise Hall, Head of National Accounts at Kensington Mortgages, and Alastair Douglas, CEO of TotallyMoney.


Inside the world of high net worth lending
The mortgage market continues to evolve, and so too does the answer to the question: what is a high net worth individual in today’s market? In this episode of the Mortgage Insider podcast, host Phil Spencer is joined by Stephen Moroukian, Head of Product and Proposition for Real Estate Financing at Barclays Private Bank, and Islay Robinson, founder and CEO of Enness Global. Together, they explore what brokers really need to know when supporting high net worth individuals.

The future of the bridging industry and the Autumn Budget
MoneyAge content editor, Dan McGrath, is joined by head of marketing at Black & White Bridging, Matt Horton, to discuss the bridging industry, the impact of the Autumn Budget and what the future holds for the sector.