The majority of working people have dramatically unrealistic expectations about what their retirement income will be, according to the National Employment Savings Trust.
In a survey of more than 1,000 working people, Nest found that 60 per cent expected to need a retirement income of between 50 and 100 per cent of their current income.
That expectation was in stark contrast to the reality, as UK average replacement rates currently stand at just 29 per cent.
Low earners on £10,000 to £15,000 a year were the most likely to target 100 per cent of their current income.
Two thirds of respondents said they were not confident they would have enough to live a comfortable retirement.
Nest chief executive Helen Dean said the research suggested the replacement rate was “too much of a blunt instrument and it was “worrying” so many people had unrealistic expectations about their retirement income.
“What an individual needs in later life will depend on things like income levels during working life, whether housing costs have to be taken into account, whether there’s potential income from a partner and aspirations for later life,” she stated.
“Auto enrolment gives people a big helping hand, not only to get into the savings habit but also by boosting their pots with employer contributions and tax relief.
“However, we need to start thinking about how to help people think about the next steps once they’re in - what are their aspirations and likely needs in retirement and how can saving in a pension help them get there?”
The survey covered 1,020 working people aged between 22 and state pension age, on incomes of more than £10,000 a year.
james.fernyhough@ft.com
