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Figure 1

Clearly, the 12% benchmark won’t ensure a luxurious retirement, even when savings in National Insurance, travel costs and possibly mortgage are taken into account. It should provide what most would consider an acceptable, but not particularly comfortable, living standard.

When we asked consumers what income they felt they would need to live comfortably in retirement, the average came out as £23,469. This is close to the average earned while working (taking into account that National Insurance is not payable in retirement), with lower earners looking for an increase to their income and higher earners willing to accept some reduction. Current savings levels are well short of those required to meet this target – we estimated that a combination of state pension and savings at 12% from age 30 could produce a pension of around £15,600 a year for an average earner, which is only around two-thirds of what they were looking for.

So while there’s been a good improvement in savings levels over the last couple of years, it’s only enough to provide a basic level of retirement income if it’s sustained, and not enough to meet people’s aspirations.

27% 98% 46%

35%

£10,00 earnings a year

£30,000 earnings a year

£50,000 earnings a year