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Middle class 'risk poor retirement'

Some 15 million middle income households are at risk of seeing their incomes more than halved in retirement, according to a report.

Research by Chatham House revealed that the middle class could see a significant drop in their quality of life and see their income drop by 60 per cent to just £13,500 a year.

The thinktank also found that another 10 million households, who are on below average low incomes, risk being left entirely dependent on the state pension.

Chatham House, which has projected retirement incomes going forward to 2050, said the steep fall in incomes for middle earners would come despite a number of policy changes, including workers being automatically enrolled into pension schemes.

It said the Government had a window of opportunity in which to encourage middle-aged people on middle incomes to save more, or accept that they would have a "seriously diminished standard of living" during retirement.

It added that if people aged 45 could be persuaded to save 10 per cent of their income each year, they could boost their wealth when they retired by up to 25 per cent, helping to offset the projected decline to their living standards.

The group called on the Government to consider introducing "more radical" measures to encourage people to save for their retirement, such as guaranteeing minimum annuity rates, matching pension contributions and improving access to financial advice.

Copyright © Press Association 2011

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