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80% see income fall after retiring

People are experiencing a huge drop in income when they retire, according to Prudential.

Its research found that around 80 per cent of pensioners see a drop in their monthly income averaging £347 after leaving full-time employment.

A third of retired people are struggling to survive on less than £10,000 a year.

Nearly one in five pensioners questioned by Prudential said they had not expected their income to fall after retiring from work. Women are hardest hit, living on 23 per cent less income than men.

Prudential speculates that, with more than 607,000 people due to retire in 2003 and 629,000 in 2004, more people will be hit by poverty.

Of those people who do not experience a drop in income after retirement, more than a third have investments or savings. Twenty-six per cent have a personal or company pension.

Pru says pensioners are cutting back on other spending to make ends meet. Clothing and leisure activities are the most common areas for cuts in expenditure for 62 and 59 per cent of people respectively. Around 57 per cent go on fewer holidays and 46 per cent target the costs of running a car.

Director of customer channel Gary Hitchens says: “This is a stark lesson for today&#39s working population. Only 15 per cent of those questioned did not have a drop in income when they retired. Pension providers and the Government have been telling people they have to act now and our research shows that leaving it too late is storing up trouble for the future.”

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