Just over a third (34 per cent) of people have a clear idea of how much income they will need in retirement, according to research from Hargreaves Lansdown.
The survey of 1500 found that people aged over 55 fared slightly better, with 37 per cent feeling confident, compared to 29 per cent of those aged 35-54.
However, additional rate taxpayers were more confident, with 65 per cent saying they knew how much income they would need in retirement, compared to 58 per cent of higher rate taxpayers and 34 per cent of those paying basic rate tax.
Hargreaves Lansdown head of retirement analysis, Helen Morrissey, suggested auto-enrolment was to blame, arguing that its success has been based on “inertia.”
“The problem is that this inertia means many people remain locked into paying auto-enrolment minimum contributions, and this risks them being in a situation where they don’t have the kind of income they need,” she explained.
“There’s also the potential issue that people may be saving into their pension, thinking they are doing enough when they aren’t, and this can lead to a nasty shock.
“Many of us just don’t think too much about what retirement might look like and how much it could cost. It all feels too far into the future. However, taking a bit of time now to work out what you want this period to look like could save you a lot of drama in the future,” urged Morrisey.
She highlighted the value of tools such as online pension calculators and the pension tracing service to boost retirement prospects and consolidate pensions, providing an overarching view of what savers have.
“However, before you do so, make sure you aren’t incurring any unnecessary exit fees or potentially missing out on valuable benefits such as guaranteed annuity rates by doing so,” she warned.
Looking ahead, pension adequacy will be at the forefront as the government prepares to launch the second part of its long-running pension review.
The results will shape thinking around state pension and workplace reform for years to come and will give people a better idea of what it is they should be aiming for,” suggested Morrisey.
“Encouraging people to get to grips with what they have so far and think about whether it gets them to where they need to be will also be vital in boosting retirement outcomes,” she added.
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