The ideal retirement income is £22,500 according to those approaching retirement and planning to buy an annuity, research from Canada Life has revealed.
According to the PLSA retirement living standards, this ideal retirement income equates to a ‘moderate’ living standard.
Canada Life said that those with pension values under £200,000 would ideally like an annual income of £20,000, while those whose pension is over £200,000 would like £28,300. This figure is closer to the ‘comfortable’ retirement living standard according to the PLSA.
The research found that pre-retirees were split on whether they expect the same standard of living as they have now, with 46% of respondents anticipating their retirement living standards to remain the same, while 36% expect their living standards to deteriorate. Meanwhile, 10% believe their living standards will improve in retirement.
Pension values have an impact on the retirement standards that people expect, with 20% of those with pensions valued over £200,000 expecting their living standards to be better, compared to 8% of those with pension pots below £200,000.
Nick Flynn, retirement income director at Canada Life, said: “A generation of savers planning their retirements have relatively moderate ambitions for their ideal incomes. 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.”