Consumers who obtain regulator financial advice can expect to see a 49 per cent increase in retirement income compared to those that did not, according to Old Mutual Wealth.
The firm surveyed a sample of 1,536 adults in the UK aged between 50 and 75, finding that retirees who had not set themselves a target income for retirement have an average income of £17,500 a year.
Those consumers that had a target minimum retirement income and saw an adviser had an average income of £26,000 a year, a 49 per cent increase compared to those that did neither.
Those who had a target income in mind before they retired had an additional £157,500 income over the course of an average retirement.
Those consumers who saw a financial adviser at least once had an average income in retirement of £20,800, the study found.
Alongside this, the research also looked at income drawdown as a source of retirement income, comparing the potential income that drawdown can provide over a traditional annuity.
Old Mutual Wealth’s calculations showed it may be possible to secure the national average retirement income through drawdown with a savings pot 25 per cent smaller than that needed if using an annuity.
The report also examined how other income sources are expected to make a greater contribution to the income of those yet to retire.
Access to, and reliance on, final salary pension schemes is on the wane, the firm said, and whilst property downsizing contributes an average of 2 per cent of income for those currently retired, this rises to a 15 per cent expected contribution for those yet to retire.
Carlton Hood, customer director at Old Mutual Wealth said: “Thinking about where your income is going to come from and having a target in mind clearly makes a difference to your outcome in retirement. So does seeking financial advice.
“More people yet to retire are setting goals that will make them better off in retirement, and our study clearly shows that advice pays.”
He added: “What is also clear is that retirement income is changing and people are preparing to use many different sources to fund this stage of their lives. The report shows that people are adapting their behaviour accordingly and the picture of retirement income in the UK is not as bleak as some would like us to think.”
ruth.gillbe@ft.com