A fifth of women and 12% of men approaching retirement age have no pension savings and will rely solely on their state pension to make ends meet, a shock report has found.
Put together with the fact the average annual income of retirees drops by a massive 66% when they leave the workplace, and a clear picture emerges of just how difficult people are finding it to ensure they have financially-secure retirement.
LV='s annual State of Retirement report found that while an average annual salary for the over 60s is £25,480, the average annual pension income is jut a third of that at £8,774. The figure means the average Brit is likely to retire with an average income that is 24% less than the annual minimum wage.
The gloomy picture continues when taking into account the gender pay divide too. The report found that women will have to survive on an annual pension income that is up to 40% less than men, with women receiving £6,580 and men receiving £10,967 a year.
Because of the problems, more and more Brits are changing their retirement plans. A third of people aged between 60 and 69 have rethought their plans in the past 12 months, with the vast majority of those (85%) now expecting to retire later than they originally planned to.
But the report indicated that people are simply choosing to delay their retirement, rather than put more away. Over the past year, 10% have actually decreased the amount they are saving for retirement by an average of £50 a month – or £600 a year.
Carrying debt into retirement is also proving an issue. More than on in 10 (12%) have credit card debts, 7% are still paying-off their mortgage and 5% are overdrawn.
The report comes after Chancellor George Osborne announced a wide-range of reforms and changes to the country's pension system, including allowing retirees to spend their pension pot how they see fit, rather than having to buy an annuity that would guarantee an income for life.
Greater financial commitments
Richard Rowney, LV= life and pensions managing director, said: "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.
"The Chancellor's latest Budget has given retirees even more choice and greater flexibility as to how they use their pension fund. Although the vast majority of people will experience a drop in income when making the transition from working life to retirement, considering all the income options available and seeking financial advice will help to ensure that retirees are able to make the most of their savings and select a solution that best suits their needs."