Europeans far more likely to rely on the state in retirement

People in the UK are less reliant on state pensions than elsewhere in Europe, according to a new study. We may be behind Asia and South America when it comes to taking control of our retirement income, and we may be saving a fraction of the sums that we need for a comfortable retirement, but things could be worse.

The Schroders Global Investor Study asked investors what proportion of their retirement income comes (or will come) from the state. Europeans put most hope in a decent state pension, with the average investor expecting it to make up 27% of total retirement income compared to just 14% in Asia and 12% in the Americas.

In the UK, meanwhile, the average investor expected the state pension to make up just 19% of their retirement income. Not surprisingly, on average, UK investors expect the largest contribution (32%) of their total retirement income to come from their company pension scheme and 17% to come via savings and other investments. They expect 12% to come from a personal pension, income from property rental to be 5% and 4% of total retirement income will come from part-time work.

The bad news

Before anyone gets carried away feeling too smug, it's worth pointing out that this survey only spoke to people who had already had a fair sum of cash in savings and investments - at least €10,000. If they had talked to people with less set aside for the future, the picture would have been far less positive.

As James Rainbow, Head of UK Financial Institutions and Strategic Accounts for Schroders says: "Most countries, including the UK, are facing gaps in the amounts being saved that may leave many investors with incomes that will fail to offer them a comfortable retirement."

So while we can take solace in the fact that the rest of Europe is struggling to save even more than the UK, it's up to all of us to face the reality of our own retirement income.

There are three important steps we should all take today.

1. Do the sums
It's essential to track down a pension calculator, enter the sums you have put into a pension so far, the amount you are currently saving, and calculate whether it's going to be enough.

2. Don't panic
If the calculations reveal a major shortfall, don't panic and give up entirely. You can make small tweaks to the calculator - looking at a later retirement date and small increases to your contributions. You may also be able to factor in your other half's pension income, a windfall from downsizing or an inheritance - which will make the overall shortfall less hideous.

3. Don't forget
Thinking about your pension isn't a 'once-and-done' kind of a thing. You need to revisit it regularly to see whether you can afford to put more money away, check whether you are on track, and make sure your pension investments are still right for you.

Only then can you afford to sit back and feel smug about how your own pension stacks up against the European average.