Savers are underestimating the amount they will need to retire comfortably by £100,000 new research has shown.
In a survey of 2,000 people carried out by financial advisory group Foster Denovo, 64% of respondents believe they will have enough to retire on with an average amount of £125,700. However, previous research by consumer group Which? estimated that for a comfortable lifestyle, providing a salary equivalent of £27,000 per year from income drawdown, savers would need £215,450 in their pension pot.
For a more luxurious lifestyle, that figure would need to more than double to £502,775.
Jamie Smith, financial adviser, Foster Denovo, said: “What is concerning is that despite this disparity, confidence of being on track is still very high. These figures would be worrying enough on their own, but in the current environment whereby savers are seeing their pension pots impacted by market volatility and record falls, it highlights that far more is needed to be done to educate savers.”
The research also found that a third of consumers are unaware of the current value of their pensions.
Smith added: “It is vital that people understand how much their pensions are worth to ensure they are able to retire comfortably, instead of living in the fear of running out of money. Now is a particularly worrisome time for investors but despite the current volatility we are experiencing, it is important to not make knee jerk reactions, but instead follow the right advice and guidance to put in long-term plans to achieve realistic and properly informed goals.”