MetLife analysis of ONS data on household income shows that benefits make up nearly half of the average retired household income, equivalent to around £10,800.
The average 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, the analysis of government data shows.
By contrast, investment income accounts for just 6% of household retirement income at around £1,420 a year per household, the figures show.
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.
However, MetLife believes the data demonstrate the need for certainty over income in retirement – anyone who runs out of money and needing to rely on the State would suffer a 52% drop in household 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.
“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.
