The headline figure has leapt from £150,000 in 2002, according to the research by Royal London.
The firm says even more “worrying” is that falling levels of home ownership mean that younger generations, who end up having to pay rent in retirement, could need a total pot as high as £445,000 to avoid a slump in living standards when they stop work.
Financial Planners should factor in “a large private rental bill” into their calculations for clients, says Royal London.
The company’s new policy paper ‘Will we ever summit the Pensions Mountain?’ seeks to answer the most frequently asked question in pensions, like ‘how much do I need to save for my retirement?’
The report looks at an average earner on just under £27,000 per year and assumes that they draw a full state pension of just over £8,500 per year.
It assumes that retirement will bring some cost savings such as no longer having to pay a mortgage, no longer having to contribute into a pension and no work-related costs, such as season tickets, and therefore suggests that workers who can retire on two thirds of their pre-retirement wage will see no fall in their standard of living when they stop work.
This means a private pension income of just over £9,000 is needed in addition to the state pension.
Helen Morrissey, personal finance specialist at Royal London, said: “If our retirement pot is going to support us through a longer retirement and in an era of lower interest rates, we are going to need to build a much bigger pot than in the past.
“More worrying still, we can no longer assume that we will be mortgage-free homeowners in retirement.
“For those unable to get on the property ladder during their working life, a large private rental bill needs to be factored in to retirement planning.
“For all of these reasons, we cannot afford to be complacent about current levels of retirement saving.”
She added: “This research also has big implications for the mandatory 8% contribution rate from April 2019 for those who have been auto-enrolled into a workplace pension.
“This is a great start, but the government needs to act quickly to nudge people up to more realistic savings levels.
“Without this, many millions of people will face a sharp drop in living standards when they retire.”