Pensioners, particularly those who are retiring this year, are much worse off now than they have been in the past. This is because of a combination of the recession, the eurozone crisis, and the Bank of England’s economy-boosting policies have rocked markets and ruined annuity rates.

Annuity rates, which fell by eight percent in 2011, have now shown their fourth consecutive year of decline.

Poorer pensioners

This is terrible news for pensioners, who are already facing a state pension age increase that will see them either working longer, or retiring with no state income.

It is known that the state pension, while a great help, is not enough for most people to live a comfortable life during retirement. However, foreboding new figures suggest that even when the state pension, company pensions, and other retirement investments are taken into account, 5 million pensioners will still have an income below £10,000 a year.

The study, commissioned by insurers Prudential, suggests that pensioners in London will be retiring with the highest combined pensions, at around £17,900 for each average person. By contrast, people in Yorkshire and Humberside are estimated to make just £12,800 a year.

Savings culture

This all suggests that despite the vast amount of people who know that the state pension will not provide enough income, and also know that their pensions are performing poorly, people are not saving enough. Though pensions are being hammered by current economic conditions, the onus of saving for the future is still on individuals, who must realise that pensioners are being left worse off by the state of the economy.

A pension calculator can help savers understand how much to put away, and estimate how much they will receive upon retirement. However, it’s important to keep track of investments. Active retirement planning, rather than ‘sleepwalking’ into retirement, can keep savers protected from the shocks of having too little money too late into their careers.

Since the current climate is hitting this year’s retirees particularly difficult, many people are looking to the option of working longer. Those who can do this will see their state pension grow by more than 50% from 5 years of working past retirement age, which could potentially be a great help towards retirement expenses.

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