Marvin OnumonuBroadstone analysis of the Department for Work and Pensions’ Planning and Preparing for Later Life 2024 survey found people aged 40-75 who haven’t retired yet said they would need an average income of £30,525 a year to live on in retirement.
A single pensioner with £30,000 a year would be in the top 15% of pensioner incomes.
The state pension currently pays £11,973 a year, leaving a gap of £18,552 to be filled with private pensions, savings, investments or extra benefits.
To generate this income through an annuity at age 66, it would take a pension pot of around £330,000.
27% of people expected the state pension to cover over 70% of their retirement income, with 15% expecting it to provide more than 90%.
The survey also found 26% of retirees aged 40 to 75 said they felt worse off in retirement than they had expected.
David Brooks, head of policy at Broadstone, said: “This analysis shows a disconnect between people’s expectation of their income needs and the savings required to secure that income.
“In general, people are over-estimating what is an achievable and necessary income in retirement.
“While we don’t want to deter savers from targeting over £30,000 a year, that objective needs to be based on reality and the ability to balance needs both pre and post-retirement.”
Brooks added: “There is possibly also an underestimation of the savings required to reach these income goals with a large gap needed to bridge what the state pension will provide and what people believe they need in retirement.
“The purpose of the pensions commission will be to examine how they can enable people to save adequately so that they can contribute enough into their private pension or other savings vehicles.
“There are likely to be innovative mechanisms to achieve this beyond just ratcheting up mandatory employer and employee contributions such as the suggestion of pension side-car savings.”
