Retirees have an average £131,000 in retirement savings, despite hoping to save £250,000 into their pension pots, Standard Life has found.

New research from the firm revealed that this change in savings potentially reduces monthly income in retirement by £480.

In Standard Life’s retirement voice report, it found that on current annuity rates, a pot of £250,000 could likely lead to a monthly income of £1,007, or £12,091 in a year, assuming a retirement age of 66.

A pot of £131,000 could result in a monthly income of £527 in retirement, or £6,332 a year, which is a reduction of £5,759 annually.

However, the £250,000 pot still falls short of a moderate standard of living in retirement, according to the Pensions and Life Savings Association (PLSA).

Managing director for retail direct at Standard Life, Dean Butler, said: "It can be hard to work out how much you need to save to achieve your desired standard of living in retirement, particularly earlier on in your career. It’s even harder to stick to it, as everyday expenses and those one-off costs that come up in life constantly threaten to move long-term saving down the priority list.

"Clearly there’s a big gap between what people hope to save, and what they actually do – this is unsurprising, particularly when looking at it during a cost-of-living crisis, however the result can be a significantly reduced standard of living in retirement."

As part of the research, retirees expressed several regrets in relation to their financial preparations for retirement.

Half wished that they’d thought about their retirement finances at a younger age when they had more time to make changes. Over half (54%) also wished that they had saved more, and 53% wished they started saving earlier.

Other regrets included wishing that they had more information about how to plan and prepare for retirement (51%), seeking advice or guidance in the run up to retirement (42%) and before they had accessed their pension savings (37%).

Butler added: "Access to affordable personalised advice and guidance is crucial to closing the gap – as things stand, way too few people feel able to get advice and we can see that people then regret not doing so.

"Ultimately, contributing as much as possible, as early as possible is the key to a good retirement outcome, but it’s a huge challenge to know what to aim for and when to prioritise long-term saving over more immediate priorities."

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