Millions of people appear to have unrealistic expectations about their retirement income, a savings body has said.

Research by NEST revealed that most people expect their retirement income to be high in relation to their current income, however most are not saving enough to match these expectations.

NEST’s research found that:

· 6 in 10 (60 per cent) expect to require an annual income of 50 to 100 per cent, or above, of their current income. Yet the current pension replacement rate in the UK is just 29 per cent.

· Low earners (earning £10,000-£15,000) can’t envisage living on much less than they do now, so more of them are targeting 100 per cent of their current income levels than people in other income brackets.

· Two thirds of people are not confident that their income in retirement will cover their needs.

· 17 per cent don’t know how much they’ll need.

Helen Dean, CEO of NEST, was concerned by the unrealistic expectations of consumers.

She said: “There isn’t a simple answer to how much is ‘enough’ in retirement. We often do this by working out a percentage of each individual’s final earnings. We call this a replacement rate. But our recent work suggests that this can be too much of a blunt instrument.

“What an individual needs in later life will depend on things like income levels during working life, whether housing costs have to be taken into account, whether there’s potential income from a partner and aspirations for later life. It’s worrying that many consumers seem to have unrealistic expectations about their retirement income. Many are simply not saving enough to match their expectations.”