Retirees could be heading into trouble as average pension pots require ten times more investment growth than they currently produce to realise the desired levels of retirement income, according to research.
Figures from Avacade Future Solutions showed the average saver ideally wants to retire on a pot size of about £335,000, which equates to an income of £20,000 per year.
But it emerged that those surveyed were only saving enough to achieve about 10% of that figure.
The research said that current average pots stand at just £33,000. For savers to achieve their desired retirement income their pension funds would have to return 30.15% a year, yet in reality the average performance is about 3.78%, it added.
The research also showed almost a fifth of people are scared of running out of money in retirement.
Pension reforms that were announced in the 2014 Budget and introduced in April gave over 55s complete access to their defined contribution pension pots, subject to normal rates of income tax.
The latest research, carried out by the portfolio consultancy, suggested about half of over 55s planned to withdraw a lump sum from their pension pots and a fifth of those wanted to put the money into a savings account.
The survey asked a representative sample of 2,003 UK adults and found 13% planned to invest their cash into products that are not property-based, while 9% will invest into their own property or pay off their mortgage and 3% will use the cash to buy a new property.
The survey also pointed to a lack of confidence among savers about making financial decisions in retirement.
More than one in ten UK pension holders do not feel they have received sufficient guidance in order to make a wise decision in light of the freedoms, with 13% concerned that they will make an irrecoverable mistake, it said.
Meanwhile adviser directory Unbiased detected people’s demand for retirement advice surged in the last year.
The site reported traffic to its financial adviser directory increased by 35% in the past year driven by a doubling in the number of searches for retirement advice.