The majority (83 per cent) of British adults underestimate how much annual income is recommended for a single pensioner living a moderate lifestyle by at least £10,000, research from Lightyear has revealed.

The research found that 11 per cent correctly guessed that to maintain a moderate lifestyle a single pensioner needs to budget £31,300 per year after tax (as estimated by the Pensions and Lifetime Savings Association), with those over 60 slightly more likely to get the answer wrong.

Older participants were more likely (31 per cent) to opt for the smallest amount of £12,400 per year than younger participants (22 per cent).

The research also revealed that despite 81 per cent claiming to be confident dealing with money, 23 per cent have less than £500 saved for emergencies.

Indeed, 1 per cent of respondents were able to answer all of the financial literacy questions correctly, while the majority were able to correctly answer six of the 10 questions.

The four questions that most respondents failed to answer correctly included two questions about pensions.

The report also revealed a gender investment gap, with 41 per cent of men able to correctly identify the difference in risk between stocks and bonds compared to 33 per cent of women.

One reason given for this was that 52 per cent of women said they felt they did not know enough about online trading and investing.

Although 38 per cent of respondents identified the false statement about stocks and bonds in the list, it was the second most incorrectly answered question in the survey.

The survey also asked respondents about their knowledge of the state pension, with just over half (52 per cent) incorrectly guessing the age at which the state pension can be collected from.

However, those aged 60 and over were 24 per cent more likely to answer the question correctly that the state pension age is 66 (72 per cent).

In terms of allowance for the state pension, 64 per cent correctly guessed that the rate of the full state pension is £221.20 per week, while 19 per cent overestimated the weekly allowance and 18 per cent underestimated it.

Again, those aged over 60 were more likely to correctly guess the answer, as 79 per cent of this cohort answered the question correctly.

The research found that despite these results, 81 per cent of people rated their financial literacy at a confident seven or above out of 10.

The majority (87 per cent) of respondents said they consume financial-related content in their spare time.

The survey also highlighted that those consuming this content were higher earners, as 8 per cent of those earning more than £100,000 per year never consumed financial-related content, compared to 22 per cent of those earning less than £25,000.

However, 74 per cent claimed that their schooling did not prepare them for financial responsibility as an adult.

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