The average annual income drops by two-thirds upon retirement and the average person retires with an annual income almost a quarter less than the minimum wage, according to a major financial provider.
In its annual State of Retirement report, LV also highlights that a fifth of women have no pensions savings within five years of retirement and will rely solely on the state pension.
A total of 30% of women aged over 50 expect to work longer than previously anticipated compared to a quarter of men (23%).
LV also found that 12% of retirees have outstanding credit card debt, 7% have an outstanding mortgage and 5% are overdrawn.
The report reveals that while the average annual salary for the over-60s is £25,480, the average annual pension income, including state pension, is just a third of that at £8,774.
This means that the average Briton retires with an annual income almost 24% less than the minimum wage.
Richard Rowney, LV=life and pensions’ managing director, 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 is 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.
“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.”
The report findings indicate that the gender pay divide that women experience in the workplace continues into retirement.
The research suggests that women will have to survive on an annual income that is up to 40% less than the average man’s retirement income with women receiving £6,580 and men receiving £10,967 a year.
This equates to a weekly income of £126 and £211, respectively, and an income drop of 68% for women compared to 60% for men.
Of those within five years of retiring, almost a fifth (19%) of women do not have any private pension savings at all and will rely solely on the state pension, compared to 12% of men.
The lack of private pension savings means this group will see their income fall by 78% as they potentially have to live on a “pension wage” of just £110 a week.
The survey found that 30% of workers aged between 60 and 69 have changed their retirement plans in the last 12 months and the vast majority (85%) of these now expect to retire later than they had planned.
Of those aged 50-59, 17% believe that they will have to work past the state retirement age due to financial reasons while a further 19% intend to continue working out of choice.
The findings suggest that some are choosing to delay retirement rather than save more, with 10% having decreased their pension savings by an average of £50 a year which equates to a £535 million lost in retirement savings.
An LV spokesman said that more than half of those within five years of retirement expect their regular outgoings to rise or stay the same when they leave the workplace.
He added: “Traditionally by the time someone reaches retirement they would have paid their mortgage off and have fewer financial commitments than when they were working.
“However, today’s retirees are not only facing a considerable income drop when they leave the workplace, they’re also entering retirement with outstanding debts, putting pressure on the purse strings.”