People's dreams of exotic holidays or living abroad when they retire are not realistic based on current savings levels, according to Aviva.
Aviva says pension contributions should be much higher if people wish to meet their retirement goals.
The number of people saving into a pension is at a record high thanks to the process of auto-enrolling workers into pension schemes.
But the amount they are saving into a workplace scheme is at a record low of £5,110 per year on average.
Minimum automatic contributions will rise to 8% (3% employer and 5% employee contributions) in April 2019 (up from 5% - 2% employer and 3% employee), but Aviva says even this is unlikely to be sufficient.
To help close the gap, Aviva is calling on the government to increase minimum auto-enrolment contributions to 12.5% by 2028.
Alistair McQueen, head of savings and retirement at Aviva, says: “We know people are facing many financial pressures, which often make saving more difficult. But saving into a pension should be aspirational.
"We need to remind ourselves that we are putting aside money for a better life in the future."
- Are you owed a state pension boost? Credits worth £3.5 BILLION are going unclaimed, new official figures reveal
The gap between the dream and reality
Travelling, hobbies and giving money to children and grandchildren are the top three things employed people would most like to do when they retire, according to the pension provider.
But Mr McQueen adds the retirement dream may "not be the retirement reality for many people".
He says: “Travelling the world is clearly a goal for some people, but if you’re not prioritising saving for retirement, that dream trip may never come true."
A survey found that almost half of people (47%) say they would like to travel when they retire, while 29% said they would like to start a new hobby.
One in five working people (21%) said when they stop working they would like to give financial help to their children or grandchildren.
However, the findings also show a gap between people’s hopes for the future and the reality they may be facing.
Almost a quarter (23%) of employed people think retirement will be a struggle, while nearly a third (31%) say they will only have enough to get by.
Less than a third of people questioned (32%) say saving for retirement was among their top financial priorities, despite aspirations to lead an active and generous retirement.
For younger people, pensions tend to be less important with around one in five (19%) workers aged 22 to 30 saying it is a priority.
Saving for retirement becomes a greater priority 56 to 65-year olds though, with over half (54%) stating it is a top priority.
A knowledge gap could also be holding people back. More than eight in 10 questioned (83%) say they have limited or no understanding of how different pension schemes work.
The research also found that many people don’t talk about pensions for fear of appearing boring or because they lack sufficient knowledge.
- BBC warns unless over-75s pay for a TV licence it may have to "fundamentally change" with cuts to service
Aviva says it has three ‘rules of thumb’ for retirement saving to give people an idea of how much they should save:
- The 40 Year Rule: aim to begin saving at least 40 years before your target retirement date
- The 12.5% Rule: aim to save at least 12.5% of your monthly salary towards your retirement. That includes contributions from employee, employer and the government
- The 10 Times Rule: Aim to have saved at least 10 times your annual salary by the time you reach retirement age
Finally Mr McQueen says: “Retirement should be something we all look forward to, but we should be aiming to thrive, not just survive. To make the retirement of our dreams a reality the planning starts now.”