Middle Britain set for big drop in retirement income

MIDDLE earners face a severe financial squeeze in their retirement, raising the spectre of future political unrest, the think tank Chatham House warned today.

Retirement income could plummet by almost 60 per cent from pre-retirement income for middle income (£18,000 -- £44,000 yearly) households.

“The UK has a distinct problem with middle income earners who are failing to save enough and are likely to find the drop in income during retirement unexpected and unacceptable,” said Paola Subacchi, one of the authors of the report.

Chatham House reports if middle income households save about 10 per cent of their earnings after the age of 45, they could boost their wealth upon retirement by as much as 25 per cent.

However, the UK faces milder problems than France and Germany, “in which the state is committed to generous pensions for an ageing population,” Subacchi added.