The price of a comfortable retirement is around £15,000 a year, according to auto-enrolment scheme provider National Employment Savings Trust.
Its poll of more than 2,000 UK retirees aged between 40 and 75 looked at a number of factors including pensioners' ability to pay household bills as well as their sense of satisfaction with life. It found that pensioners' overall sense of satisfaction increased by an average of 7 percentage points per £5,000 of income, although this began to level out once household retirement income hit £40,000.
The Retirement realities survey revealed that the initial income threshold for a greater sense of wellbeing was around £15,000-£20,000 a year, including the state pension.
Forty-three per cent of pensioners living on this income said they were financially comfortable, compared to just 24% of those living on less than £15,000. The report highlighted that a third of people living on less than £15,000 found it difficult to afford their household energy bills and a quarter said they found it hard to pay for groceries. This dropped to just 15% and 9% respectively for pensioners with a household income of between £15,000 and £20,000.
NEST chief executive officer Tim Jones said: 'Retirement is now more likely to be a gradual shift than a one-time "cliff edge" event. Many people will have more time to save up and the latest reforms to pensions mean there's more choice than ever for accessing retirement savings during later life.'
He said that the workplace pension was just 'one tool in the savings box' on top of their state pension, adding that it was a vital 'foundation to build on'.
The single flat-rate state pension will takes effect in April 2016 and is expected to be worth about £7,500 a year in today's money.
On that basis, a 22-year old earning £20,600 a year, saving at the minimum auto-enrolment level (4% employee; 3% employer; and 1% tax relief) throughout their working life and retiring at 68 could expect an annual household retirement income of £14,260.
But a 30-year old on the same salary, making the same contributions on top of their state pension could expect just £11,790 and a 40-year old could expect £10,210.
NEST said savers could build up their pots with a few small changes to their spending habits, setting out several practical ideas on how people could bump up their contributions. These included bringing packed lunches to work and drinking less beer and shop-bought coffee.