If we all earn £1m, why are so many badly off in retirement?

Even an average worker will earn £1 million in their lifetime – but few will have saved enough to pay for a comfortable retirement.

Most men gross their £1 million at the age of 56 years, nine months and three weeks.

However, women have to wait much longer – until they reach 72 years, four months and three weeks old.

The figures come from a new study by pensions and finance firm The Prudential, who reckon most men can earn £1 million providing they start working at 18 and earn the average income for their age until state retirement age at 65.

The magic million is actually worth £778,770 in the bank because the government takes a large slice – £137,101 in income tax and £84,129 in national insurance.

Most workers could claw back some of that money in tax relief on pension contributions, claims The Prudential.

Someone paying £100 a month in to a personal pension over a 40 year working life could gain an extra £12,000 relief on their contributions to help boost their fund.

The bad news is out of every five millionaire earners, only two (37%) are likely to save enough to fund a financially comfortable retirement.

Vince Smith-Hughes, retirement expert at The Prudential, said: “We might think that making a million is a pipedream, but it will become a reality for those who earn an average salary throughout their working lives, especially if they are men.

“Looking at cumulative earnings in this light helps us to understand how much we could potentially save for our retirement. Of course, ongoing financial pressures and priorities means that it is not always that easy, but it remains the case that the earlier you save and the more you save, the better retirement income you will have.

“Pensions remain highly efficient tax saving vehicles which can help savers to claw-back some of the tax that they have paid over the years.”

The figures reveal that an average person working until 65 earns a total of £1,217,604 before tax, while those working on to 70 will hit £1,322,009 earnings.

The research also showed average earnings for UK workers peak at £31,328 when they are in their 40s – but men hit a high of £40,652, while women reach just £21,758.