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The majority of British workers are “dangerously underestimating” the amount of money they will need to ensure a basic standard of living in retirement, according to research from PensionBee.
Fewer than half (49 per cent) of respondents expected they would need a total pension pot of £250,000 or more.
According to the Pensions and Lifetime Savings Association’s Retirement Living Standards, a single person would need £14,400 a year to ensure a ‘minimum’ standard of living in retirement.
If someone has a 20-year retirement, they will therefore need £288,000 to meet the minimum Retirement Living Standard.
Nearly a quarter (23 per cent) of working-age Brits said they were unsure of the total pension pot size required to achieve their desired standard of living in retirement, the most common response to the survey.
This was followed by 15 per cent expecting to need less than £150,000 saved for retirement.
PensionBee said that this suggested many were underestimating the true cost of retirement and risking a pension shortfall.
Around one in seven (15 per cent) indicated a desire income of more than £45,000 a year, exceeding the ‘comfortable’ Retirement Living Standard of £43,100.
They survey also asked whether respondents felt on track to achieve their desired retirement savings, with nearly half (43 per cent) saying they did not feel on track.
Almost a third (30 per cent) felt unsure about their progress to meeting their expected retirement income, while 27 per cent believed they were on track.
“It’s hard to plan for retirement without an idea of how much you might need, yet most Brits seem to be unaware of - or worse, dangerously underestimate - the true cost of retirement,” commented PensionBee’s director of public affairs, Becky O’Connor.
“However, one rule is broadly true: The earlier individuals start paying into a pension, the more likely they are to be able to afford their desired lifestyle, as their pension has longer to grow and the amount they’re required to save each month reduces.”
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