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Yorkshire and Humberside offers best overall retirement prospects with 77% expecting to retire by age 65

2 October 2017

Londoners anticipate highest average retirement income levels

The overall pre-tax income in retirement of Londoners between the ages of 54 and 71 years, from state and personal pensions as well as other investment sources, is set to be the highest in the country with an average of £27,785, a new nationwide study by retirement technology specialist Dunstan Thomas found. While the East Midlands Baby Boomers came second in the Dunstan Thomas’ Retirement Wealth Prospects League with an average of £27,451 and Southwest-based 54-71-year olds ran a close third with an average of £25,352. Wales was only a little way back in fourth with £25,250. The worst retirement income prospects are in the Northeast where average incomes in retirement are set to be £18,125, the second bottom is Northern Ireland at £19,674*.

Defined Benefit (DB) pension entitlement is a key measure of retirement income health as the amount of retirement income they are set to provide is, on average, significantly higher than Defined Contribution (DC) schemes. DB pension penetration is highest in Yorkshire and Humberside (58%) and Northwest (57%), while Scotland is not far behind with 51% penetration. The Northeast* and East Midlands fare least well on this measure with 39% penetration each. Average DB penetration across all Baby Boomers captured by this nationwide study is 48%.

The same study of UK Baby Boomers aged 54-71 years old, commissioned by Dunstan Thomas in June this year, found that 77% of Yorkshire and Humberside residents expect to retire, or have already retired, by the current male State Pension Age (SPA) of 65 years. Scottish residents ran a close second in the Dunstan Thomas Retirement Prospects League with 71%* while 70% of Boomers living in the West Midlands predicted they would conform with the currently-recognised age for retirement. Bottom of this league table were residents in the Southeast and Wales where just 59% and 56% respectively, anticipate putting their feet up at the age 65.

Of those who are not currently retired (59% of the whole sample of 1002 54-71-year olds surveyed across the UK), two-thirds (66%) of non-retired West Midlands’ residents predicted they would need to work full- or part time beyond age 65 to prop up their retirement income. Southeast non-retirees fared little better with 64% anticipating working on into their late 60s. Nationwide over half of Boomers (56%) predicted working on well beyond age 65. Northwest non-retirees appeared to have least need to take on paid work beyond age 65 though – 44% of non-retired people there felt they would need to continue paid work to make ends meet after 65.

Over a third (36%) of Southwest* non-retirees felt they would be working on for 4-5 years beyond SPA to keep afloat. Wales* won this retirement wealth prospect indicator with only 9% of non-retirees based there thinking they will need to work 4-5 years after the current male state pension age.

Wales’ Boomers have the highest full-time employment in the age group in this study – 41% of them are still working full-time. Northern Ireland* runs a close second with 38%, while the Southeast’s boomers are third with 37% still in full-time employment. The average percentage in full-time employment nationwide is 31%. Scotland wins in terms of percentages in part-time paid work with 25%, while the East Midlands claims the lowest part-time working percentage with just 13%. Average part-time working penetration amongst 54-71-year olds in the UK stands at 20% according to the Dunstan Thomas study.

Nearly four out of 10 (38%) Baby boomers aged 54-71 years old living in the East of England have or are the most likely to downsize to make ends meet in retirement, while Southeast-based Boomers ran a close second with 36% of them planning to downsize (or already completed downsizing of) their primary home to free up capital for retirement. Wales took third place in Dunstan Thomas’ Downsizing for Retirement Income Hot Spot League Table with 33% downsizing. Baby Boomers based in Scotland are least likely to downsize to release equity to support retirement incomes - only 20% have already downsized, or plan to downsize, in this age group. The average nationwide was 29%.

Although Baby Boomers generally have better retirement income prospects than younger generations because of their more stable career progression and higher exposure to more generous DB, final salary-linked pension schemes, those with children are also ‘the sandwich generation’, both caring for elderly parents and looking after children (and grandchildren) for much longer than in the past. The mean average that Boomers aged 54-71 years expect to be still looking after their child[ren] for once they have retired is one year but 6% of them expect to look after their children for at least six years.

The Child Dependency hotspots are the Northwest where 9% of Boomers expect to be still looking after their children for a minimum of six years into retirement. In both the East of England and in London, 7% are predicting looking after their children for at least as long. However, in the Northeast* no boomers anticipate looking after their children this long.

Of the nearly a quarter (23%) of 54-71-year olds that provide free care for a family member, nearly two-thirds (63%) of Yorkshire & Humberside* family carers are freeing up another member of their family to go out to paid work. In Northern Ireland*, this is true for 59% of respondents; while in Wales* 51% of carers enable other family members to go to work. On average nationwide, 44% of family carers aged 54-71-year-old enable another family member to go to work.

The average divorce rate across this age group is 11% with potential for pension-splitting divorce at its highest in Scotland where divorce rate amongst this age group is 22%; followed by Yorkshire & Humberside 16% and Southeast 14%, according to the Dunstan Thomas Retirement Wealth Prospects Report. The East Midlands and the Southwest have the lowest divorce rates at 6% and 5% respectively.

One in 10 (10%) Baby Boomers in Northern Ireland expect to spend more on cars when they retire, while 7% of respondents which Dunstan Thomas surveyed in both the East and West Midlands regions expect to spend more on cars than they did before retirement.

East Midlands boomers hope to splash out more than others on holidays in-retirement – 33% of them plan to increase holiday expenditure once they retire; while 30% of Southeast Boomers expect to spend more on holidays. A quarter (25%) of 54-71-year olds nationwide plan to spend more on holidays. The Scots meanwhile appear to be most keen to spend their money on home improvements – 13% of them predict increasing spend in this area post-retirement, only beaten by the retirees based in Northern Ireland* - 15% of whom estimate they will spend more on improving their home.

Southwest retirees prefer to increase spending on eating out – 16% of them will do that; while in the East Midlands 14%, and amongst Northeast-based retirees* 13%, favour increased spend in pubs and restaurants. London retirees prefer to plan for increases in expenditure for healthcare -19% of the capital’s boomers declared that retirement spending priority, closely followed by the Southwest (17%) and East Midlands (16%).

All is not lost for bancassurers as 32% of Northeast boomers* still favour going to their bank branch for financial guidance and advice associated with retirement planning. In Wales, it’s even higher at 33% and Scotland is not far behind at 30%. But in London and the East of England residents are much less likely to use their local bank branch for retirement planning advice, with only 15% and 14% respectively favouring this route to retirement savings planning. On average nationwide, one in five (21%) still favour the idea of getting retirement savings advice from their high street bank.

Predictably, London (64%) and Southeast (66%) are the most content to research retirement savings options and products online, while Northeast Boomers are least comfortable with doing this sort of research and product buying purely online – only 50% favoured this route. The Southeast claims top spot for use of regulated financial advice for retirement matters with 16% of boomers there using an adviser, while both London and Scotland run a close equal second with 11% using retirement-orientated financial advice from a qualified adviser. 10% of Yorkshire & Humberside boomers have had regulated retirement savings advice. By contrast in Wales only 5% have shelled out for regulated retirement advice and 7% have done the same in the East of England.

Adrian Boulding, Director of Retirement Strategy, Dunstan Thomas, commented: “The Dunstan Thomas study has revealed a complex web of people piecing together a retirement income through a mix of pension, part-time work and other income sources. In many cases these Baby Boomers need retirement income not just for themselves but also to support other family members, either financially or through the provision of free childcare”

* All regional samples which have an asterisk beside them are indicative only meaning that the sample size of respondents for those questions in that region were over 20 but less than 50.

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