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Only nine per cent of the working population is currently on track to reach that standard

Millions of Britons could be heading towards retirement with far less money than they expect, with many underestimating how much they will need each year.

A large gap has opened up between people's expectations for later life and the amount of money required to achieve them, according to new research.

The full new State Pension is worth £12,548 a year in 2026/27. However, Pensions UK estimates that a single person needs an annual income of around £45,400 to achieve a comfortable standard of living in retirement.

That leaves a £32,852 annual gap that would need to be covered through private pensions, savings or other sources of income.

Despite this, new research from PensionBee found that nearly half of UK adults, 47 per cent, believe a comfortable retirement would cost £30,000 a year or less.

That is at least £15,400 below Pensions UK's comfortable retirement benchmark.

It is also below the £32,700 a year that Pensions UK estimates a single person needs for a moderate retirement, which includes an annual overseas holiday and eating out a couple of times a month.

Overall, more than three-quarters of adults, 77 per cent, underestimate the £45,400 annual cost of a comfortable retirement.

The problem extends beyond people's expectations as Pensions UK estimates that just nine per cent of the working population is currently on track to achieve a comfortable retirement.

Despite this, many Britons remain optimistic about their later years. More than half of UK adults, 56 per cent, say they feel hopeful or excited about retirement. However, this optimism is not always backed up by financial planning.

Just 16 per cent of adults have calculated how much they will need for retirement and also feel confident they are on track to reach that amount.

More than a third, 38 per cent, do not know how much their desired retirement lifestyle will cost.

Nearly half of this group still feel confident they will achieve their retirement goals despite not knowing how much money they will need.

Overall, 18 per cent of adults are confident they will achieve the retirement they want despite never calculating how much it will cost.

For many people, the lack of preparation appears to be driven more by financial pressures than a lack of interest.

Among the 39 per cent who believe they started planning for retirement too late, 32 per cent said they previously could not afford to put money towards their pension.

That is twice the 16 per cent who said they did not know where to start and almost three times the 12 per cent who found pensions too confusing.

Wider pressures on household finances could be making it even harder for people to save.

Recent ONS figures show 35 per cent of adults expect they will be unable to save any money over the coming year.

Meanwhile, 56 per cent said their cost of living had increased over the previous month.

For one in four adults, nothing has yet made retirement feel like a tangible financial reality.

Maike Currie, VP Personal Finance at PensionBee, said: "Britons aren't short of retirement dreams. What they're short of is confidence that their finances will make those dreams a reality.

"That's the irony in these findings. People are far more certain about the retirement they want than they are about their ability to pay for it."

She added: "For plenty of people, the barrier is money, not motivation. No amount of encouragement can fix a month that doesn't balance."

Ms Currie urged those in a position to act to start with simple steps, such as using a retirement calculator to estimate future costs and consolidating old pensions to build a clearer picture of their savings.

"Once you know what you're aiming for, you can start making a plan to get there," she said.