Can you afford to retire with your annuity, or continue working?
More surveys are being published about the state of the retirement market, and whether or not the simple process of simply buying a pension annuity and living off it, and any state income is enough. We have uncertainty over the stock market, fuelled by unstable financial conditions around the world, so it’s really not surprising to see that 31 per cent of employees reaching retirement age want to carry on working, according to this survey published by the Confederation of British Industry (CBI). The figure is up from 22 per cent a year ago – and the CBI says 81 per cent of applicants are permitted to carry on working.
Members of private pension schemes relying on shares are really worrying if they can ever retire, with soaring council tax and energy bills expected to affect their reduced income.
The state pension adds £90.70 for a single person and £145.05 per couple to increase the total retirement income.
Let’s look at the effect of living longer and pension annuity income. The £100,000 private pension fund that bought an annuity to pay a pension of £15,000 a year in the Nineties might generate only £7,500 today and barely £4,000 if applicants take an index-linked income that pays half-pension to a surviving spouse.
Did you know that last year the average size of a fund used to buy an annuity was only £33,500. At current annuity rates, that could mean an income of only £1,380 a year – or £26 a week – for the average 65- year-old male. That’s not a great deal of money to live on.
