Each year of retirement is funded by just under two years of work, according to Aviva’s latest Real Retirement Report.
The report found that due to people living longer, retirement years could be extremely underfinanced.
It calculated that today’s people over 55s will live for an average of 88 years, typically working for 44 years and a retirement of 25 years.
According to the report, the main source of income for the over 55s is the government pension (26%), followed by employer pensions (16%), and wages (13%).
Clive Bolton, ‘at retirement’ director for Aviva, said: “Many over 55s are worried about maintaining their standard of living and as today’s average retiree is looking to finance every year of their retirement with just under two years of work, these fears are justified.
“The equation becomes even more concerning when you realise the average person starting work today will live for longer – thus reducing the ratio of working years to years spent in retirement even further.
“Currently, the biggest income source for over 55s is the state pension but with longevity increasing, the government has acknowledged it will need to review the way it provides later life financing.
“All these factors highlight the simple fact that as a nation, we need to save more for retirement.
“With the high cost of living, we cannot all afford to put substantial amounts away each month but even small amounts add up over the years and will help to ensure retirement is not characterised by a struggle to survive on a tiny income.”
Read more on retirement and occupational pensions