How much can a £250,000 pension pot get you in your retirement?

Research from Standard Life found that people have £131,000 on average by the time they retire.

This is a massive shortfall in the amount they hoped to have available (£250,000) to buy an annuity or invest to generate an income.

A £250,000 pot can buy an annuity - which provides a guaranteed income for life - worth £12,091 a year at today's rates, according to Standard Life.

A £131,000 fund can currently get someone an annuity of £6,332 a year.

With many people ending up with just over half of their pension saving goal, Britons are urged to carefully consider their retirement plans so they can ensure they have enough to live off in retirement.

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The Pension and Lifetime Savings Association (PLSA) regularly puts out figures showing how much it costs to fund a minimum, moderate and comfortable level of retirement.

This provides a useful guide to calculate how much someone may need to retire and how much to put into their pension.

The PLSA shows that a couple now needs an income of £59,000 a year to be "comfortable" in old age, whereas a single person needs to save even harder and achieve a £43,100 income to cover this standard of living - covering meals out, holidays, theatre trips, and a car, in addition to everyday essentials.

The figures presented assume that savers qualify for the full new state pension – which is currently £11,500.

Standard Life found half of retirees have regrets about their financial preparation, with 53 per cent wishing they had started saving earlier, and 42 per cent that they had got financial advice or guidance.

Dean Butler, managing director for retail direct at the firm, 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 savings 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.

“Ultimately, contributing as much as possible, as early as possible is the key to a good retirement outcome.”

A good way to contribute more if to round up any pension savings.

Rounding up monthly pension contributions to the nearest £100 could generate thousands more in retirement savings, the analysis found.

Those who begin working on a salary of £25,000 per year and pay the minimum monthly auto-enrolment contributions (five percent employee, three percent employer) from the age of 22, could have a total retirement fund of £434,000 by the age of 66, not adjusted for inflation.

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However, those who rounded up their pension contributions to the nearest £100 throughout their career, up until the age 66, could find themselves £64,000 better off in retirement with total pension savings of £498,000, not adjusted for inflation.

Mr Butler added: “Many of us now use banking apps that will automatically round up purchases to the nearest pound and put the difference into savings.

“It’s a little nudge that goes unnoticed at the time and if you’re in a position to do so, rounding up your pension contributions to the nearest round number each month can be a great way to top up your savings.

“It could have a very positive impact on your final retirement pot and, as a result, your standard of living in retirement. The difference might seem small each time, but over a number of years can add up to a lot.”