The average British pensioner retires with an income that is only around 75% of the minimum wage, according to new research.
While the average salary for a worker aged over 60s is £25,480 a year, average pension income, including state pension, is just a third of that at £8,774 a year.
That means, says pensions firm LV=, average annual income plunges by two-thirds when someone gives up work.
As if that is not bad enough for retirees, 12% have credit card debts, 7% pay a mortgage and 5% have overdrafts with a bank eating away at their spending power.
The picture is also bleaker for women.
Savings run out in five years
The research suggests that 30% have exhausted their pension savings within five years of leaving work and have to rely on the state pension for the rest of their lives.
For men, the number is much smaller, with only 12% having no retirement savings five years after leaving work.
This leads 30% of women to carry on working past retirement age, compared to a quarter of men, who have more retirement savings under their belts.
The figures are unaffected by Chancellor George Osborne’s overhaul of how the over 55s can draw their retirement savings from pensions.
If anything, says the report, anyone drawing their pension funds early under the new rules will have to budget carefully to eke out their savings over their lifetime.
The study also found women have 40% less retirement income than men, picking up £6,580 a year compared to a man’s £10,967 a year.
The pension firm explained that evidence shows a lack of retirement savings has seen nearly a third of men and women aged between 60 and 69 change their retirement plans during the past year.
Most (85%) says they expect to work longer than anticipated to put aside extra savings and pay down debts.
Spokesman Richard Rowney said: “Anyone approaching retirement now is under a huge financial strain because their savings have to last longer as life expectancy increases.
“Having a longer retirement is no bad thing, but does mean people have to make sensible financial decisions sooner rather than later to make sure they have enough money to last.
“Unfortunately, many cannot retire when they want to do due to debt eroding their spending power. Giving up work and losing a wage can have a big impact on someone’s lifestyle and plunge them into pension poverty.”