Just one-quarter (27%) of UK staff aged under 35 have worked out how much they will need to live on in retirement, according to research by Royal London.
The mutual life, pensions and investment firm, which surveyed 4,000 UK adults, also found that two-fifths (38%) of adults under the age of 35 plan to retire by age 60, with an average retirement age of 61.8. This is six years ahead of the current state pension qualification.
On average, those aged under 35 predict they will need £1,086 per month in retirement income; an amount that would provide a minimum standard of living and would be mostly covered by the state pension, which is currently set at £886 a month.
Meanwhile, those aged 35-49 plan to retire at an average age of 63.9 and expect to need £1,295 a month once retired, while those aged 50-69 wish to retire at an average age of 65.4 and expect they will need £1,292 a month to live.
Clare Moffat, pensions expert at Royal London, said: “Being so far away from retirement, the younger generation have an optimistic view of when they’ll be able to give up work but there is a significant gap between expectations and retirement reality. Two-fifths of younger adults do not plan to work beyond 60 years of age, even though they won’t qualify for a state pension until much later, and that poses serious questions about how they will fund the type of lifestyle they want to enjoy when they’re older.
“However, savers in their 20s and 30s have a couple of significant advantages on their side: time and compounding of their investments, which potentially enables small amounts of money to grow into larger sums over time. Early planning and setting realistic timescales and rates of pension saving is key, that way savings will accumulate earlier, building wealth over a longer period of time, and giving ambitious retirement goals a better chance of being met.”