Britons are grossly underestimating how much they need to put into a pension for a comfortable retirement.
Enjoying a comfortable retirement requires an annual income of £33,070 a year, according to research by Alico.
There are wide ranging differences on how much people think they would need to live comfortably, with almost half (47%) of UK adults believing they will need an income of between £20,001 and £40,000 a year.
However, in order for a 65 year old to retire on £33,070 per year, they would need to have accrued a pension pot of £537,900.
This is more than double the average £256,750 that respondents think they will need to retire on.
Of even greater concern, based on a combination of investments and pension savings, the average Briton expects to have amassed a pension pot of £168,060, giving an annual payout of just over £10,900 to someone retiring at 65.
This is less than a third of the amount that people believe would enable them to enjoy a comfortable retirement.
As such, many retirees are likely to see their plans scuppered.
More than a fifth (21%) of people believe that they will live out a comfortable retirement in sunny climes, while 17% think they will have amassed a big enough pension fund to enjoy the high life.
"Making sure that the UK has adequate pension provision across the board is clearly on the agenda of the new Government," Jon Sadler, head of retirement solutions at Alico Wealth Management, commented.
"Our research shows that there is a gulf of more than quarter of a million between what Brits think that they need to save for a comfortable retirement, and the reality of their situation.
"Despite all the media attention in recent years, people in the UK still need to be better educated about the importance of making provision for the future.
"Getting into the habit of putting a regular amount of money into a personal pension and making sure their pensions keep working hard will go a long way towards ensuring a more comfortable retirement for people in the UK - even if the payments start off small and build up over time."
To give yourself the best chance of building up a decent pension pot, it is advisable to shop around for an annuity.
Why not start your annuity research today? Our annuity Best Buy tables illustrate how the offerings from annuity providers such as MGM Advantage and Saga compare.
We've also recently teamed up with Premier Retirement Services to give you access to their online annuity planner service.
Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
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