One in five expect to retire with just £2,500

However the average person anticipates having £42,244 stashed away in savings at retirement, excluding any pension pot. A further 12% are planning to have more than £100,000 in savings when they finish work.

Nationwide's poll shows six in ten people (60%) don’t have any spare money to save each month. A third of those surveyed (33%) describe themselves as “just about managing” their finances, with no money to fund unexpected bills. A further one in ten (11%) manage but struggle to pay upcoming bills, pointing towards a limited ability to save. Worryingly, many don’t see the situation improving any time soon, as just a third (31%) say they are optimistic about their financial future.

Despite this downcast view, there are many people who remain optimistic, with nearly two thirds (64%) claiming they would always aim to save up to fund a large purchase, such as a holiday or a new car, rather than turn to credit, with half of savers (48%) choosing the tax-free option of a Cash ISA. One in five (20%) claim they are already saving enough, with one in six (17%) claiming they could save more but don’t want to cut back on their current spending.

New ISA flexibility rules came into effect at the start of the 2016/17 tax-year giving ISA savers the ability to withdraw and top up their ISA to the maximum allowance; previously, if a saver withdrew funds from their ISA, that part of their annual allowance was lost. The research shows that one in five (20%) savers who withdraw money from their ISA replace it again at the same level. The majority (38%) of savers say they made the withdrawal as they needed to access the money in an emergency or were saving for a particular purchase (31%), such as a deposit for a home, which they are now ready to make.

Tom Riley, Nationwide’s Head of Savings, said: “Many people take comfort from having money put aside that they can access in an emergency or that they can dip in to, to fund life’s little luxuries. For some a regular savings habit is a way of life, but others need more of an impetus to put money aside on a regular basis. This could be the desire to fund a certain purchase, such as a deposit for a home or a wedding, but for others the kick-start could be having faced a previous situation where they needed money, but had none put aside.

“If people are able to save even a small amount, they tend to be more confident about their financial future.”