They also have no idea how much they need to save in order to hit their retirement income target.
Nigel Swan, head of pensions at financial adviser Ellis Bates, says this leaves people completely in the dark: “Saving for retirement is one of the most important things you can do, so you need to know where you stand.”
Several free online pension calculators can give you a clearer picture, by showing how big a pot you need and how much you need to save each month to get it.
These three could handsomely repay a few minutes of your time.
Money Advice Service
The Money Advice Service is a free, impartial service set up by the Government to provide general financial guidance, and its website includes a pension calculator that takes around 10 minutes to fill out.
Key in your date of birth, gender and preferred retirement age, then enter your salary. Next, input details of all your pension pots.
The site will then calculate the likely size of your pension when your retire, assuming your contributions remain the same.
This will show you how much of a shortfall or surplus you are likely to have.
He says: “And you can even adjust contributions to see how much more you need to invest to hit your target.”
Swan’s verdict: “The calculator is quick and easy to use, and provides you with a great base to plan your retirement.”
Insurance and pensions giant Aviva has a comprehensive retirement section on its website that includes a free “My retirement planner” tool.
You key in details on age, gender, salary and existing pensions.
Swan says: “Aviva’s calculator is slightly more detailed, because it then asks for personal information such as height, weight, smoking and medical conditions, to help calculate your life expectancy.”
Swan’s verdict: “The final results page is slightly harder to read, but the information is personalised for your health and lifestyle.”
The investment management company’s calculator is the quickest and simplest, and great if time is short.
Swan’s verdict: “The Nutmeg pension calculator may not be as comprehensive, but it gives a quick insight into what your pension could be worth over time.”
Save, save, save
Some may find the results challenging. For example, Nutmeg shows a 50-year-old man who wants to retire at 67 on £20,000 (plus the state pension on top) would need a pot of £558,000 by 2034.
If he currently had £100,000 saved he would need to pay in a hefty £1,029 every month to hit his target.
Andrew Tully, pensions technical director at Retirement Advantage, suggests contacting your pension companies for an updated statement: “Don’t forget about the state pension, which forms the bedrock of most people’s retirement income. You can get your state forecast online at Gov.uk/checkstate-pension.”
He says Retirement Advantage’s research shows that most people underestimate how long they will live, and risk running out of pension as a result.
“The general rule is, the more you save the better, and if still uncertain, consider taking independent financial advice,” he adds.