New research suggests that the current generation of pensioners are actually living in a golden era for retirement.
One financial expert even claims that retirees have never had it so good, which may surprise the many pensioners battling against rising prices on a low fixed income.
So are retirees really living in a golden age, and how long can it last?
New official figures make it clear that the lot of the average pensioner really has improved over the last 40 years, financially at least.
Back in 1977, just one in five retired households had an annual disposable income of more than £10,000, after accounting for inflation.
By the end of the last financial year, that had jumped to 96 per cent.
The main reason is the dramatic growth in workplace and personal pensions, which account for more than half the increase after rising sevenfold over the period, according to the Office for National Statistics (ONS).
Ed Monk, associate director for personal investing at Fidelity International, says we have come a long way in 40 years: “In 1977, being retired was practically synonymous with being poor, but thankfully that is no longer the case.”
The problem is not everybody is benefiting: retirees with company or personal pensions are 1.6 times better off than those without.
Income inequality is therefore widening, although less so than in the 1980s.
Tom Selby, senior analyst at online investment platform AJ Bell, says average disposable weekly income for someone with a company or personal pension is now £534.75, against just £331.33 for those without: “The gap between the pension haves and have nots is on the rise, a stark reminder of the impact of failing to save for retirement. Today’s savers can no longer rely on the state to fill the void.”
Crucially, the ONS figures do not include housing costs, which have risen sharply, leaving those still renting or paying off a mortgage in retirement notably worse off than homeowners who have cleared their debt.
Prudential discovered that one in four people retiring this year will still have a mortgage or other debts to pay off, owing £24,000 on average.
This problem is also likely to grow with mortgage debt held by over 65s doubling from £20 billion today to nearly £40 billion by 2030, the International Longevity Centre-UK calculates.
Today’s pensioners have also been hammered by the Bank of England’s decision to slash base rates to near zero, sending savings and annuity rates to…