New research from Barclays Financial Planning reveals a worrying gulf between people’s expectations about their retirement age and income, and the financial reality, which could leave millions of future pensioners facing a shock unless they address the situation now.

Almost half (48%) of workers are not personally paying anything into a pension each month and of those who are, the average contribution is far less than it should be. However, the research also shows that despite warnings in the recent Turner report and A-Day being imminent, the majority of UK adults are adopting an ‘ignorance is bliss’ attitude, with two thirds of people (63%) claiming not to be worried about retirement planning at all.

The average worker in the UK would like to retire at 59 but predicts that they’ll realistically be retiring at 63, according to the research. When asked what level of income they would expect to receive annually following retirement, the average was £18,300.

Barclays Financial Planning suggest the average worker in the UK needs to increase their monthly pension contribution by as much as £315 a month to end up with the retirement lifestyle they’re expecting, at the age at which they expect to retire.

The average contribution amongst those who are paying into a pension is £54 a month.

According to BFP, this would currently generate an income of just £2,054 a year at 63 which, when combined with the full potential from the Basic State Pension of £4,266 per annum at age 65 would bring total retirement income to £6,320 per year, which equates to about a third of their expected income.

Some people will qualify for the Second State Pension, the annual maximum of which is currently £7,598. This would bring their total retirement income at age 65 to £13,918, still a third less than the average Briton is currently expecting.

In order for a single 30 year old man with a target retirement age of 65 to achieve his expected pension income of £20,560, he would have to increase the amount saved into a personal pension from £73 net a month to around £345 a month. Equally, a woman of the same age would have to increase her monthly savings from £35 to around £217 to reach her expected retirement income of £15,570. There might be additional income gained from the Second State Pension, which would contribute towards this, but not everyone will receive this pension.

Stephen Ingledew, director of BFP, commented: "As a nation, we need to get real around retirement and view planning as a necessity, not a luxury."

"More shocking still is that, when we’ve compared these results to research Barclays carried out ten years ago, little has changed in a decade. People continue to have high expectations around retirement, but contributions remain woefully inadequate and mass inertia persists."

"We each need to take personal responsibility to ensure that we are saving enough, especially if we want to spend much of our time on holidays. Financial education is very important, particularly when we’re seeing just over a quarter (28%) of people reviewing their pension on a regular basis."

"A good rule of thumb is for people to put aside contributions which, as a percentage of pay, are at least half the age at which they start saving for retirement. For example, if someone starts at age 20, they should contribute at least 10% of their salary or if they start at age 30, it should be at least 15%, and so on. The sooner you start to save for retirement, the less daunting it is."

Despite the recent figures clearly showing a significant gap in what people want and what provision they are making, almost two thirds of UK adults (63%) do not appreciate the gap and aren’t worried at all about financial provision in retirement.

Moreover, the research showed that the same amount - 63% - fully expect to maintain their current lifestyle past retirement, with current retirement plans including:

• Going on lots of holidays and seeing the world (48%) 
• Looking after grandchildren (24%) 
• Buying a property abroad (11%) 
• Buying a property in the country (6%)

Stephen Ingledew suggests asking the following questions to gauge whether you are on track. If you answer no to one or more of the following questions, you need to seek advice:

• Have you made any provision at all for your retirement?
• Have your retirement plans been reviewed in the last 12 months?
• Have you reviewed your retirement plans in line with any change in circumstances such as promotions/bonuses you have received or marriage or divorce?
• Would your current retirement fund allow you to retire at the age you want to?
• Do you know in today’s terms how much you will be receiving on a monthly basis in retirement?
• Are you confident that your retirement plans are sufficient to maintain your current lifestyle in retirement?

To get an idea how much your pension might eventually produce, go to http://www.pensioncalculator.org.uk