Savers lack knowledge of retirement income needs, research shows

Nearly a third of people do not know how much they should save for their pensions, according to new research.

Analysis from Hargreaves Lansdown published on Tuesday found that 29% of the 1,400 people surveyed did not know how much money they needed to fund their retirement.

It is the latest in a series of surveys and polls from various providers showing a lack of confidence and preparedness for retirement.

The Hargreaves Lansdown poll, which was conducted by Opinium in September, also found that one fifth of people thought they needed to save between 6% and 10% of their salary yearly to have enough income in retirement. A similar proportion said between 11 to 15% - despite the auto-enrolment minimum sitting at 8%.

Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, raised concerns after the research found that 44% of those aged over 55 said they didn’t know how much money they needed to save.

She said: “This is concerning not only because they are close to the age at which they would want to retire, but they could also face curveballs in the coming years, such as ill health, which could force them to leave the workforce early. If they aren’t on track, then there’s a nasty surprise in store.”

The prospects look brighter for younger people as only 19% of those aged between 18 and 34 said they had no idea how much they needed to save.

Hargreaves Lansdown’s research estimates that a single person needed to secure an income of £25,000 a year to achieve a moderate retirement. The Pensions and Lifetime Savings Association’s Retirement Living Standards estimates a moderate income would be £31,300 a year.

Morrissey added: “We all have different ideas for what we want that time to look like and other things – such as mortgage or rental costs – may need to be factored in. For some, contributions of 8% will give them what they need, while others will have to do more.”

Earlier this year, Trafalgar House’s Trust and Confidence Index found that 48% of people felt they had much less than they needed for retirement – up from 45% a year earlier.

The index also showed that 54% of respondents felt they would need to delay their retirement, did not know when they would retire, or thought they might never retire.

The government has pledged to explore adequacy issues in the next phase of its Pensions Review, amid increasing demands for minimum auto-enrolment contributions to be raised.