This rises to 80% for the number of individuals unaware of how big their pension pot will need to be, with 10% believing £25,000 will be enough – despite providing just £987 a year.
Experts recommend that people should aim in retirement to have two-thirds of the income they enjoy when working in order to maintain their lifestyle, with calls now being raised for this knowledge gap to be addressed.
Saga Investment Services head of product, Sally Merritt, said: “The research proves just how desperate affordable advice and guidance is needed, and we urge the regulator to address this.
“It is a real concern that people in their 40s and beyond are so unaware of what they need in their pension pot to give them the lifestyle they want in retirement.
“People are in danger of becoming pothole pensioners, who face a bumpy road ahead because they didn’t invest well enough when they had the opportunity."
The research involved surveying 1,641 people aged 40 and over in February 2017, with respondents saying on average that they thought a pension pot of £126,000 would fund a basic retirement.
However this would return an income of £6,904 a year, significantly less than the £10,400 needed to cover a lifestyle of bills and food, but with little money left over.
There was also an average underestimate when it came to predicting the pension pot required for a comfortable lifestyle in retirement, while the respondents undervalued the cost of funding a luxury lifestyle by more than half.
“This could well be because people underestimate how long they are going to live in retirement, or that they simply don’t understand what sort of income a typical pension pot can generate,” Merritt continued.
“Our survey demonstrates how important it is for people to take the time to think about their savings and investments as early as possible to give them time to put a little more away if they think they are not going to have as much as they need.”
The research also found that people in the North East are most likely to underestimate the cost of a basic retirement, with women less likely to know the cost than men.
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