The gap people need to fill between their income aspirations in retirement and the amount provided by the State Pension has climbed to £18,552, according to new analysis of DWP figures.

People aged 40-75 who are yet to fully retire said, on average, that they needed an income of £30,525 to live on in later life.

That was according to the DWP survey Planning and Preparing for Later Life 2024.

Given that the state pension currently provides an income of £11,973 a year, that leaves a gap of £18,552 a year, retirement consultant Broadstone has pointed out.

The firm warned that the gap needs to be filled by pension money, additional state benefits or other savings and investments.

It said that to put the figures into perspective, if all of the money was to be provided by purchasing an annuity age 66, it would require a pension pot of around £330,000.

More than a quarter (27%) of these people also said that they expected the State Pension to deliver more than 70% of their retirement income, with 15% expecting it to provide more than 90%.

Broadstone pointed to worrying findings in the survey data which showed more than a quarter (26%) of retirees aged 40-75 said that they felt financially worse off in retirement than they had expected.

David Brooks, head of policy at Broadstone, said: "The analysis shows a disconnect between people’s expectation of their income needs and the savings required to secure that income.

“In general, people are over-estimating what is an achievable and necessary income in retirement. While we don’t want to deter savers from targeting £30,000 a year, that objective needs to be based on reality and the ability to balance needs both pre and post-retirement.”

He pointed out that a single pensioner today on £30,000 per annum will be in the top 15% of pensioner income.

Mr Brooks said: “The purpose of the Pensions Commission will be to examine how they can enable people to save adequately so that they can contribute enough into their private pension or other savings vehicles.

“There are likely to be innovative mechanisms to achieve this beyond just ratcheting up mandatory employer and employee contributions such as the suggestion of pension side-car savings.”