Research by retirement specialists, Partnership, revealed regular incomes could fall by 39% with people living in certain parts of the country being hit even harder.

Incomes between employment and retirement drop the most in London (-48.05%), the East of England (-40.20%) and the South East (-39.51%).

On a county basis, those in Buckinghamshire (-45.37%), Cambridgeshire (-44.39%), Leicestershire (-42.11%) and Hertfordshire (-42.01%) are the most likely to see a significant reduction in their income when they stop work.

The analysis of HMRC data suggests those relying primarily on their pension income to fund their lifestyle are likely to suffer a nasty shock when they retire.

Andrew Megson, managing director of retirement at Partnership, said: “While people in retirement are likely to have fewer outgoings, it is still hard to imagine that anyone would not feel the pinch if they lost a third of their income over night. Even if their pension is topped up by income from savings and investments or part-time work, it is still likely to be quite a shock.

“In addition, many will have to stop working earlier than they intended because of health and lifestyle issues so may miss out on the opportunity to make additional financial provision and they are likely to find that the gap is even more profound.”

Consumers can maximise their pension income by shopping around and finding out if they are eligible for an enhanced or impaired annuity.

Partnership said that while this is important for all those approaching retirement, it is particularly vital for those who live in more ‘affluent’ areas because if their provider uses post code pricing they may find they are worse off.

Tom McPhail of Hargreaves Lansdown says most people significantly underestimate both how long they will live in retirement and how much money they are going to need to live on.

“Typically, they start too late, save too little and expect too much. Linking projected post retirement income to current earnings makes sense as it helps to plan that transition from work to retirement.

“The other key question is when they can afford to retire. We anticipate that within a few years, retirement at 70 will become the norm unless people plan ahead.

“Everyone should take the time to find out how much is bring paid into their retirement savings, what kind of income it might produce and when they can expect to retire. A comfortable retirement won’t happen by accident.”