Golden age of retirement
The Department for Work & Pensions (DWP) and Office for National Statistics (ONS) recently published their Pensioner Income Series data for 2014/15.
The data shows average weekly income for younger pensioners is much higher than for older pensions.
Pensioners under age 75 are receiving nearly £100 a week more, on average, than those over age 75.
The under 75s receive an average of £348 a week compared with £257 per week for pensioners over age 75.
Even older pensioners have benefitted with their average weekly income having risen by 92% since 1994/95.
This is compared with an increase in income of less than a third for those still in employment.[tweet_box]Weekly income for younger pensioners is much higher than for older pensions[/tweet_box]
The latest DWP/ONS data set also shows that 20 years ago, just 7% of pensioners worked past the age of 65.
This figure has now risen to 13%.
Commenting on the findings, Fiona Tait, Pensions Specialist at Royal London, said:
“The significant increase in weekly income is great news for those in retirement. But looking at the main differences in the source of income for those under and over 75, there are clearly two key elements.
“A smaller percentage of the income for those under 75 is being sourced from state benefits, (35% compared with 55%). By contrast, income from earnings represents nearly a quarter of the income (24%) for those under 75 compared with just 3% for the older age group.
“Longer working lives look to becoming more the norm. Recent research Royal London conducted shows that working longer was ‘Plan B’ for many, particularly those who thought they wouldn’t be able to afford to retire at the State Retirement Age.
“What it is not clear is whether these people are working because they want to, or because they have to in order to supplement their income. This suggests people may be better off with a plan that is based on a more realistic retirement age, with a contingency for not being able to work.
“Benefit income, such as the state pension, is designed to provide a basic level of income, not to replace earned income. This means that the majority of people who want to maintain their standard of living into retirement will have to make additional savings.
“Automatic enrolment will help those in the workplace to secure additional pension income but saving levels will almost certainly have to be higher than the bare minimum.
“This is where a financial adviser can help to outline the best options available and ensure that savers are not disappointed when they come to retirement.”