A new retirement study has found that the average Briton retires with an annual income almost 24% less than the minimum wage.
The report for LV= also found that the average annual income of new retiree drops by two thirds (66%) on leaving the workplace.
The situation for women is particularly challenging. The survey found that a fifth of women within five years from retirement have no pensions savings and will rely solely on the state pension in retirement.
One third (30%) of women over 50 expect to have to work longer than previously anticipated, compared to a quarter (23%) of men.
According to the annual 'State of Retirement' report from retirement specialist LV=, 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. LV= says that the figures mean that the average retiree drawing their entire pension in one go under proposed post-Budget legislation will have to closely budget to ensure it lasts their lifetime.
The 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.
Of those within five years of retiring, a fifth (19%) of women do not have any private pension savings at all.
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The challenge of funding a post-work life on a small pension has clearly been realised by those nearly at retirement with a third (30%) of working Brits aged between 60-69 years changing their retirement plans in the last twelve months. The vast majority of these (85%) say they now expect to retire later than they had planned.
For those aged 50-59, a fifth (17%) believe that they will have to work past the state retirement age due to financial reasons. However, it is not all bad news, as more (19%) plan to work past the state retirement age simply out of choice.
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The findings indicate that working Brits are choosing to delay their retirement rather than put more money away. Over the last twelve months, one in ten (10%) have actually decreased the amount they are putting away for retirement by an average of £50 a month, or £600 a year on average. This equates to £535 million lost in retirement savings.
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.
"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 State of Retirement research was carried out by Opinium Research from 28 Feb to 10 March 2014. The total sample size was 1,538 British adults over 50 and was conducted online. Results are weighted to a nationally representative criteria.