13th August 2015
Benefits make up nearly half of the average retired household income equivalent to around £10,800 claims new research.
MetLife’s analysis of government data showed that the typical retired household receives around 48% of its income from benefits with the State Pension making the biggest contribution of an average £8,750 per household.
But in contrast the retirement specialist found that investment income accounts for only 6% of household retirement income at just £1,420 a year per.
The analysis of pensioner household incomes shows annual average private pension income per household is the biggest single contributor accounting for 42% of household income underling the success of retirement saving.
MetLife has warned, on the back of its research that anyone who runs out of money and needs to rely on the State would suffer a 52% drop in household income.
Dominic Grinstead, managing director, MetLife UK, said: “The State Pension is a good safety net and other benefits will help maintain a basic standard of living for retired households.
“The reforms due next year with the flat rate single tier pension could provide further help but it is clear that people who run out of money in retirement will face major cuts in their standard of living.
“Ensuring you have a guaranteed level of income and can plan with some certainty is more important now than ever following the launch of pension freedoms.”
Analysis shows other major benefits include housing benefit which contributes around £650 to the average retired household and pension credits which are worth £408 a year along with Disability Living Allowance worth £355 a year.
For the wealthiest retired households, benefits are worth around 21% of household income compared with 79% for the least well-off.