The Aegon UK Readiness Report gave the UK a retirement readiness score of 52 out of 100, revealing that most are unlikely to match their expectations of retirement with the reality.
Only 7% are close to being ready for the retirement, the report found, while most simply are not saving enough.
Personal finance expert Sue Hayward said: “Aside from a lack of surplus cash, I think the blunt truth is that most of us simply do not know where to start when it comes to saving for retirement. This is coupled with the fact that there’s a huge gap between what we ‘want’ in retirement compared with how much we’re prepared to save.”
According to the report, most Brits want an annual income of £35,000 in retirement. However, the majority can expect a mere £12,000.
Based on Readiness Survey scores, Aegon estimates that only three per cent are financially literate enough to improve their economic position.
Furthermore, 42% of people have never checked the performance of their retirement savings.
Hayward said the statistic should be “a real wakeup call”.
The Readiness Report also found that more than half of people believe the maximum state pension is higher than its current value the £110.15 per week.
They also expect to retire before they are even eligible for the state pension: most expect to retire at 63, when by 2018 the retirement age will increase to 65.
While men are more ready for retirement than women, it is only by a small margin. They are also more likely to have reviewed their pension planning.
David Macmillan, managing director of Aegon UK, said: “We know that most of the UK population are falling short of their retirement objectives, and that many aren’t reviewing savings enough to be aware of the shortfall. It’s time for the UK to get real, and for the pensions industry to lead the way and help people find solutions.”
Aegon’s new app, Retiready, allows UK consumers to determine their readiness for retirement with a score out of 100. The app also provides easy-to-understand tools and digital coaching to help bridge any gaps between expectation and reality.