The UK is on the "brink of a retirement crisis", with just 15% of UK workers setting clear financial goals and budgets for retirement, Barnett Waddingham has revealed.

The firm’s latest survey of 5,000 UK workers found that this compares to 87% that have specific retirement goals and dreams. These aspirations include travel, family time, hobbies and spending time with partners.

Reflecting on these results, Barnett Waddingham said that these statistics revealed a "concerning gap between retirement dreams and the reality".

The firm’s report, named 'the at retirement reckoning', found that gen x (aged 43-58) were most at risk of mismatching their retirement hopes with their financial readiness.

Over half (53%) of gen x surveyed are confident that they’ll have a comfortable retirement, compared to 41% who are not.

However, just one in eight (12%) said they have clear financial goals and a budget for retirement.

This compares to a third (33%) who have a "rough idea", 16% that have no plans but intend to make some, and 13% that have no plans and no intention to start planning.

Partner at Barnett Waddingham, Paul Leandro, said: "There is a chasm between expectations and reality when it comes to Brits thinking about their retirement. People - especially those in their 40s and 50s - are being driven to dream of a retirement filled with travel, pursuing hobbies, and even a life overseas.

"But the life on offer may be a mirage; the aspirational lifestyle so readily on display by their parents and loved ones today is most likely funded by defined benefit (DB) pensions - a luxury which won't be there for the retirees of tomorrow. Without a notable shift in saving patterns, many will be in for a rude awakening. Aspirations with no plans are just pipe dreams."

Barnett Waddingham revealed that over half (51%) of gen x respondents have a defined contribution (DC) pension, while 30% have a DB pension.

The firm said that, "concerningly", 49% of this cohort believe the state pension will be critical retirement income. This currently provides a maximum of £10,600 annually, meaning that this reliance

In light of these findings, Barnett Waddingham added that without "major changes in retirement planning and support", the UK would be in a "retirement crisis".

If these changes aren’t made, the firm said that the next generation of retirees might be forced to work longer, depend on family support or face a diminished quality of life.

Head of DC at Barnett Waddingham, Mark Futch, concluded: "Sadly, there’s no silver bullet to the ticking pensions timebomb. But there are some changes that could make a real difference. Firstly, improve the auto-enrolment system, by widening who it includes and increasing minimum contributions. The aspiration should be to build a DC system that generates employees a comfortable retirement over the course of a career, without needing further wealth to survive.

"At the other end of the career journey, we can build confidence by helping people visualise their income and lifestyle after employment. This is going to require significant innovation and a much more robust at-retirement framework, specifically working to increase confidence in older workers that a comfortable retirement is possible for them if they make the right financial decisions, and quickly."

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