Retirement specialist LV= has warned that, whilst the recent Budget offers those approaching retirement greater flexibility, a two-thirds reduction in income is to be expected when leaving work and entering retirement.
LV=’s annual ‘State of Retirement’ report reveals that the average salary for someone aged over 60 is £25,480, whereas the average annual pension income (state pension included) is £8,774.
The firm has stated that those taking advantage of the new opportunity to draw their whole pension at once will need to budget tightly to ensure it lasts.
The report also suggests there is a gender divide in retirement income, with women receiving sometimes as little as three-fifths the retirement income of men.
Women receive an average of £6,580, with men averaging £10,967 in annual retirement income, equating to weekly incomes of £126 and £211 respectively.
Within five years of leaving work almost a fifth (19%) of women have no private pension savings whatsoever and become reliant entirely upon the state pension, whereas fewer than one in eight retired men (12%) find themselves in the same situation.
Almost a third (30%) of Britons aged 60-69 have changed their retirement plans in the last 12 months, with the vast majority (85%) putting off retirement, supporting the view that Britons prefer to delay retirement rather than save more.
To make matters worse, many people retiring today still have outstanding debts (such as unpaid mortgages), putting further pressure on a drastically reduced income.
LV= Life and Pensions Managing Director Richard Rowney warned that those approaching retirement are under huge financial pressure, and advised those nearing retirement to consider all their options and seek financial advice so that they can make the best decisions for their particular circumstances.