Almost a half of people who responded to a recent Norwich Union survey believe they will need a retirement income of over �£25,000 a year, fourteen times more than the actual average annuity income.

 

According to new research from Norwich Union, almost a half of people who responded to this survey said they need fourteen times the average level of annuity to enjoy a comfortable retirement.The survey, of over a thousand people, identified that 47.3% of people believe they will need a retirement income of over �£25,000¹ a year.

The average total pension value used to purchase an annuity in 2006 was �£26,364², which could currently provide a retirement income of around �£1,843 a year (�£154 a month) at Norwich Union rates³.

Research has also shown that almostone-in-five people who have a personal pension do not know what an annuity is. A furthersix-out-of-10 people were at least 40 years old before they learned they have the option to buy an annuity to fund their retirement⁴.

Scott Brown, head of annuities marketing at Norwich Union, said: "With retirement income, the difference between ‘what people want' and ‘what people will get' is very different and it's essential that individuals face up to their needs in retirement.Current trends such as increasing life expectancy make it vital for people to start considering and planning for what could be a very long retirement, as we are reaching a point where it could be possible for some people to spend almost as long in retirement as they will in work.”

² Source: Mintel; Annuities and Retirement Income Solutions, Finance Intelligence, August 2007.

³Calculated on http://www.makesenseofit.com/ annuity calculator, male, aged 65, 27^th September 2007.