Pensioners set to earn more than graduates in work
Rise in retirement income means older generation paid more than those in their first full-time job
OLDER workers planning to retire this year are for the first time expected to earn more than graduates in their first full-time jobs, figures show. Pensioner incomes are soaring to record highs with people on the verge of retirement anticipating annual pension income of nearly £20,000 in 2018, according to a study by pension firm Prudential.
This is up by 30 per cent from £15,300 in 2013.
The figure this year stands at £19,900, the survey of 1,000 retirees showed.
Meanwhile, young graduates starting out in the workforce are experiencing stagnating incomes, which are for the first time being eclipsed by retirees’ booming pensions. Currently an average 23-year-old graduate can expect to earn an annual salary of £19,076, down by £16 since in 2013, ONS data shows.
Last night experts said that while the figures were “good news” for older workers, they were “galling” for younger generations who already face a cocktail of economic misfortunes.
Liz Emerson, co-founder at the Inter-generational Foundation, said: “It is galling that younger workers face stagnating wages, 30-year student debt repayments and high housing costs, while pensioner incomes continue to outstrip them.”
Vince Smith-hughes, retirement income expert at Prudential, said: “The new record high for expected retirement incomes is good news, highlighting how saving for the future is paying off.
“The 10 per cent rise from last year is even more impressive given the economic and political uncertainty that savers are having to cope with.”
The study found the average age of people planning to retire this year was 60, showing many older workers are planning to retire ahead of their state pension age. Despite many hoping to retire far earlier than their official state pension age and the record high incomes, nearly half of people planning to retire this year felt they were not financially prepared. Just half said their expected income would enable them to have comfortable retirement. Their expected retirement income will be made up of a combination of private and state pensions, and other savings.
Office for National Statistics data shows that while wages for younger graduates has slumped, salaries for those aged under 30 has risen from £20,970 to £22,691 from 2013-17.
Students currently at university in England will graduate with average debts of £50,800, after interest rates are raised on student loans to 6.1 per cent, according to the Institute for Fiscal Studies.
Interest charges are levied as soon as courses begin and the IFS says students on average will have accrued £5,800 in interest by the time they graduate.