A fifth of young adults believe they can comfortably get through their retirement on a pension pot of just £50,000, says new research.
Although a fund of that size only offers a retirement income of around £3,300 a year, few have bothered to try to understand how much they really need to save.
The reality is that retirement savers need a fund of between £260,000 and £445,000, depending on if they pay rent or own a home, says the survey by money comparison site Finder.
Most savers consider a £100,000 fund is all they need to finance retirement, even though the average response was £174,000.
£50,000 is not enough
A third of millennials believe £50,000 is enough, compared to a quarter of those born between the 1960s and 1980s and a fifth of over 55s.
The web site says retirement savers should be concerned that few know how much they should be saving, with 48% of over 55s unsure. The average is 43% for the rest of the population, while 35% of adults have no pension savings.
Jon Ostler, CEO at Finder, said: “It’s often not a priority at a younger age, but the cost of retirement for millennials is something to be prepared for, especially as a higher percentage of this generation are expected to rent in their retirement.
“It’s also concerning to learn that so many baby boomers are still yet to consider the cost of a comfortable retirement. Our study revealed that almost a quarter of this generation do not yet have a pension.
Topping up savings
“Despite the introduction of the automatic enrolment workplace pension a few years ago, over a third of those surveyed in our study said they still don’t have a pension. For those who do, 36% are unaware of how much they currently have in their pot, and a whopping 43% of Brits admit they don’t know how much they need to save for a pension.
“Employers must legally provide a workplace pension in the UK so it’s important that employees in the UK are aware of what they’re eligible for, as well as looking into a private pension to top up their pot.”