How much should you save for retirement? The answer is it depends on the person. One person might be looking for a retirement full of travel while another wants something altogether more modest.

This brings challenges when it comes to setting pension policy and is a problem the government will need to grapple with as it gets ready to announce the second phase of its Pension Review, which will focus on adequacy. It’s a piece of work that will inform thinking around the state pension as well as workplace and private provision for years to come.

Setting goals too high can mean lower earners potentially oversave into their pension and risk struggling financially today. It could even put them off saving altogether. Setting the bar too low risks higher earners going through life thinking they’ve done enough and then getting a nasty shock.

The Hargreaves Lansdown Savings and Resilience Barometer looked at four key measures of adequacy to see which might help people work out if they are saving enough.

These included so-called “pounds and pence measures” which seek to put an actual figure on what retirees need to achieve pension adequacy. Pounds and pence measures include the Living Wage Foundation’s Living Pension benchmark which sets an income level to meet basic everyday needs in retirement for single and coupled households.

This can be seen as the absolute minimum that someone should be saving for retirement and it sets a target for pension contributions, either as a percentage of salary (12%) or a minimum cash amount (£2,950 for a full-time Living Wage employee).

Read more: Key questions to ask yourself to plan for a comfortable retirement

Hargreaves Lansdown also assessed the Pension and Lifetime Saving Association’s (PLSA) minimum, moderate and comfortable living standards benchmark for single and coupled household income.

The research looked at so-called relative measures, such as target replacement rates, which set an income level in retirement based on pre-retirement earnings. For instance, they may say someone needs to save enough to cover two-thirds of their pre-retirement salary.

A specially designed current retirement expenditure measure was also used. This sets an income level in retirement using current retiree spending by income group, relationship status and tenure status.

Analysis of these measures found using pounds and pence measures may not reflect of the current living standards of higher earners, so could lull them into a false sense of security. They can also give the impression that lower earners are falling behind, when in reality they don’t need to hit higher targets to maintain their current lifestyle.