Retiree income drops by two thirds

Retirees can expect to see their income drop by 66% when they leave the workplace, according to research from LV.

The annual State of Retirement report reveals that the average annual income for private and state pensions is £8,774, a third of the average annual salary for people over 60 (£25,480).

This suggests that the average retiree will earn almost 24% less than the minimum wage.

Key findings:

  • 30% of people aged 60-69 said they have changed their retirement plans in the last year
  • 85% of people aged 60-69 said they were planning to retire later than expected
  • 17% of people aged 50-59 think they will have to work past the state retirement age
  • 12% of retirees have credit card debts, 7% have a mortgage and 5% are overdrawn.

The research also suggests that the gender pay divide faced by women in the workplace persists into retirement:

  • the average retirement income for women is £6,580 per year, compared to £10,967 for men
  • this is equivalent to a weekly income of £126 for women and £211 for men, an income drop of 68% and 60% respectively
  • 30% of women over 50 plan to work longer than expected, compared to 23% of men
  • a fifth (19%) of women do not have a private pension, compared to 12% of men.

Richard Rowney, life and pensions managing director at LV, said:

"Brits approaching retirement today are under huge financial pressure, as their retirement savings are being stretched over a much longer period of time than before. Whilst undoubtedly having a longer retirement is a good thing, it means that making the right choices on how to fund your retirement if now one of the biggest financial decisions you have to make.

"It's clear that today's retirees leave work with far more financial commitments to contend with than previous generations meaning their money has to go further for longer. Given that the age at which you stop earning a wage can have a significant impact on how much you have to fund your post work lifestyle, it is not surprising that many are choosing to delay retiring."