Simon Read: 'Check the shortfall in your retirement income now, before it's too late'

The Aviva Real Retirement Report has revealed that millions are facing a retirement income gap

As they contemplate the retirement horizon, people may not be sitting as pretty as they think (Alamy)

Amid all the concerns about mis-selling and scams hitting those attempting to take advantage of the new pension freedoms comes a fresh warning today that millions are facing a retirement income gap. The latest warning is revealed in the Aviva Real Retirement Report, published today.

It shows that a typical person aged 45 or older who is still working faces a £8,955 annual retirement income gap. The company has crunched some numbers to discover that, based on current savings and investments, many people will be forced to rely heavily on a state pension that will still leave them short of the kind of retirement income they believe they need to get by when they stop working.

I had a long chat with the company's pension expert, John Lawson, about the issue and we've made a video interview looking at what the problems are and what people can do about them.

In the video – which you'll find online at ind.pn/1LeTbUG – John explains that by just putting around £86 extra a month into retirement savings, a typical 45-year-old will solve the future shortfall. If you're 55, he explains, solving the problem will cost more – you'd need to stash an extra £179 a month into your pension savings.

They key is to do something about the problem as soon as you can: don't ignore it. The younger you are, the more time you have to get your retirement planning on track, and the more affordable it will be.

Clive Bolton, retirement director at Aviva UK Life, said of the new report: "These findings should encourage every person still in work to think hard about their retirement finances."

If you have arranged a pension some time ago, it's easy to presume that all is going well. But it is important to check its progress regularly to ensure that you will get to the level of money you think you need. Ignore the problem and you'll only wake up to financial difficulties in later life when you eventually stop working.

The frightening alternative could be that you'll be forced to work for longer because you can't afford to retire or even have to take on an new possibly part-time job when you retire just to be able to get by. If you have any sort of positive plans for your golden years, you probably need to take positive action now to have a hope of achieving them.

s.read@independent.co.uk

twitter: @simonnread