Only 7% of the UK population is close to being ready for the retirement that they want, with nine in 10 falling well short of their targets, according to a new report from Aegon.

The firm has also launched a new digital service called Retiready, designed to help people consider their retirement ambitions and understand if their overall readiness for retirement is on track. Available to use on mobile, the service demonstrates how adjustments to pension contributions, planning and money management can make a big difference.

A key part of Retiready is its readiness score, which provides a mark out of 100, giving people an indication of their readiness for retirement. Ahead of the launch of Retiready, Aegon put 4,000 members of the UK public through their paces, asking a host of questions about their behaviour, awareness and finances to assess their readiness score.

Based on the survey, the UK achieved an average readiness score of 52 out of 100, revealing that most are unlikely to match their retirement expectations with their income reality. Only 7% achieved the readiness score of 70, the level required to demonstrate they are close to being on track for the retirement they hope for.

The Aegon UK Readiness Report found that, on average, the UK wants an annual retirement income of £35,000, but at their current trajectory they are set to see just £12,000 a year when they reach the end of their working life, pointing to a huge gap between expectation and retirement reality. People are simply not saving enough to have the retirement they would like.

When it comes to awareness of how to plug this shortfall, only 3% received a score that suggests they know how to improve their financial position.

This is highlighted by 56.4% believing, at the time the survey was conducted, that the maximum basic state pension was higher than £110.15 per week.

People are also expecting to retire earlier than the state pension age. By 2018 the state pension age will be 65 for both men and women. According to our survey, at the moment the UK is expecting to retire earlier, at around 63 years of age. According to current government data2 the state pension age will rise to 68 by the time under 25s hit retirement. However, worryingly this age group currently expects to retire at 64.

In light of this ‘optimism’, Aegon said perhaps most concerning is that 30% of respondents have never looked to change their retirement plans, and 42% have never checked the performance of their existing retirement savings.

When we look at the gender divide, men are more prepared for retirement than women, but only by a small margin. Men are more likely to have reviewed pension planning within the last year, and are making significantly higher regular pension contributions (£328 vs. £175 per month). There is a slight 4% gap in the overall readiness score which could be put down to women’s much lower expectations about their retirement income (men – £47k, women – £24k), which then means women’s retirement reality is more achievable.

Comparing the generations, 16-24 year olds are not as ready as those aged 55 to 64, with a four point lower readiness score. Those approaching retirement are understandably much more hands on, with 48% of 55-64 year olds having reviewed their retirement plans in the past six months, while only 22% of 16-24s had.

David Macmillan, managing director of Aegon UK, said: “We know that most of the UK population are falling short of their retirement objectives, and that many aren’t reviewing savings enough to be aware of the shortfall. It’s time for the UK to get real, and for the pensions industry to lead the way in helping people find solutions. Showing people how to take small steps that will make a difference is vital. We must empower, rather than frighten people, and help them take control of their future finances.

“Aegon is committed to getting the UK ready for retirement and I’m delighted therefore to announce the arrival of Retiready, which will not only help show people how their retirement pot stacks up against their ambitions, but also provide valuable coaching and support to help get them back on track.

“For the first time we can help people understand where they are on their journey to retirement with a quantifiable readiness score. Retiready is an invaluable digital service for all those preparing themselves for later life and represents a huge leap forward for Aegon and the industry as a whole.”