Only two thirds (68%) of the highest earning households are on track for a moderate retirement income, according to the Hargreaves Lansdown Savings and Resilience Barometer.
Currently, a moderate retirement income is measured at £26,129 per year for a single person. However, this will be far less income than the highest earners want or expect from their retirement, Hargreaves Lansdown said.
Meanwhile, only 39% of the highest earners are on track to achieve a comfortable retirement income, pegged at £41,829 per year.
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, said: “There’s a retirement reality check in store for higher earners, with the latest data showing many are way off the mark with their pension saving.
“Only 68% of the top fifth highest earning households are on track for a moderate retirement income. This may not sound like a problem but when you consider a moderate retirement income is measured at £26,129 per year for a single person then this will be far less income than many high earners want or expect. Instead, these higher earners will be expecting a more comfortable lifestyle more in line with what they’ve enjoyed while working.”
Data from Hargreaves Lansdown shows that a pension saver would need a pension pot of around £500,000 to deliver a comfortable retirement income from a single life level annuity and £650,000 from an annuity that rises by 3% per year.
Morrissey said pension savers should look to utilise any unused annual allowances in the three previous tax years, as well as bonus sacrifice to make a tax-efficient contribution to their pension and ensure they make the most of employer contributions.
“Keeping an eye on your pensions as you go through your working life is the most important way to ensure you are on track with your savings. Using online pension calculators can show you how much you are likely to receive, and you can model the impact of making extra contributions.
“It’s a good idea to boost your pension contributions every time you get a pay increase. By checking in periodically you can see if you are on target for the retirement you planned for with no nasty surprises,” Morrissey added.
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