Expected retirement incomes have tumbled to a five year low, according to research from Prudential.

The study shows that people retiring this year expect to live on an average income of £15,500, more than £1,000 less than those who retired last year.

One in five of those due to retire this year will be forced to survive on an annual income of less than £10,000 due to inadequate retirement savings.

Commenting, Vince Smith-Hughes, Prudential's retirement income expert, said: "The current economic climate has created the perfect storm for people in the run up to retirement. The impact of the credit crunch, banking crisis, recession, and concerns over the Eurozone, has been reflected in the fact that expected retirement income levels have hit a five-year-low.

"It is concerning that expected retirement incomes are going down, while pensioner expenditure is going up. However, there are some practical steps that workers and imminent retirees can take to ensure a more comfortable retirement. For those who are still working, it has never been a more important time to save into a pension. The longer that savings are invested in a retirement pot, the greater the opportunity they will have to grow."

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