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%).

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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.

"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.

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 £110 a week.

"Today's retirees not only face a considerable income drop when they leave work, they also enterretirement with outstanding debts,," added Mr Rowney