Benefits form large portion of retirement income

RETIRED households typically get nearly half of their income from benefits, highlighting the need for people to think about putting away more for their later years, according to a study.

The average retired household receives around 48 per cent of its income from benefits, equating to around £10,800, with the state pension making up the biggest chunk, with an average £8,750 contribution per household, analysis of official figures by MetLife found.

By contrast, investment income accounted for six per cent of household retirement income at around £1,420 a year per household.

Private pension income was found to account for around 42 per cent of household income.

MetLife argues that the findings underline the need for people to have certainty over their retirement income.

It said that for the wealthiest retired households with incomes in the top 10 per cent bracket, benefits were worth around 21 per cent of household income.

For the least well-off households in the bottom 10 per cent income bracket, benefits made up around 79 per cent of their income.

Dominic Grinstead, managing director of 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.”

He said that certainty over retirement income was ‘more important now than ever’.