Only one in five pension savers believe they are on track to set aside enough money to pay for a comfortable retirement.
But half will fall short because they mistakenly believe the government’s auto-enrolment recommended amount is all they need to save.
More than 30 million adults are unsure if they are saving enough for retirement, according to the study by trade body the Pensions and Lifetime Savings Association (PLSA).
The group’s report Hitting the Target: A Vision for Retirement Income Adequacyexplains that uncertainty over how much money someone needs to spend in retirement is at the root of the savings problem.
Too many people do not save enough because they are confused about how much they should put aside for their later years, says the report.
A third of people believe they could save more, but they do not know if they should, while 44% believe the recommended auto-enrolment saving was set to ensure savers would have enough for a comfortable retirement.
But, says the report, the figure was set to provide a bare minimum to cover day-to-bills.
Three out of four people asked agreed setting retirement income targets would make saving easier for them and encourage them to save more.
Nigel Peaple, director of policy and research at the PLSA, said: “Millions of savers are in the dark about whether they’re on track for the lifestyle they want in retirement. With future generations unlikely to have the same levels of property wealth, or final salary pensions, as current retirees do, it’s vital more is done to ensure people can cover the costs of later life.
“We want the government, pensions sector, and regulators to work together to take forward our recommendations and help many more people achieve the retirement they desire.”
The PLSA report is urging the government to set retirement income targets that show the lifestyle someone could expect from different levels of saving.
The group also wants the government to do more to help people save and to explain different sources of income, such as equity release against a home.
The PLSA spoke to 1,500 people aged between 18 and the state pension age about their attitudes towards saving for retirement to compile the report.