Baby Boomers on the cusp of retirement face “crunch time” as the cost of living crisis continues to take hold and soaring energy bills threaten to derail people’s retirement planning.
According to the second Hargreaves Lansdown Savings and Resilience Barometer, only 43.1% of baby boomer households coming up to retirement (age 65 and below) are meeting the Pension and Lifetime Savings Association target for a moderate retirement income. While this is higher than the UK average (42.6%), it is below the Generation X household average of 46.9%.
The PLSA’s standards say a single person would need a retirement income of £20,800 per year to achieve a moderate standard of living, while a couple would require £30,600.
When it comes to surplus income at the end of the month, baby boomers lag the average (50.5%), with only 46.6% having money left over.
Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown, said: “Baby boomers on the cusp of retirement face a real crunch time as the cost of living crisis continues to bite. There is a lot of discussion about how the baby boomer generation have a better financial deal than those who came after them. They are more likely to retire with a final salary pension and to have benefitted from the enormous house price inflation we have seen over the years. Many are sitting on a great deal of wealth.
“However, that certainly isn’t the case for everyone. Many have retired with generous pensions but given they have worked the majority of their careers in the pre-auto-enrolment world there are also those facing retirement with little, if any, pension wealth. Similarly, when it comes to home ownership not everyone has been able to get on the housing ladder and so go through retirement either still paying off a mortgage or needing to find money for rent.”
Morrissey said there’s still a “long way to go” before the UK population achieve resilience in their retirement income, with only 42% of households on track for a moderate retirement income
Morrissey added: “With inflation continuing to soar, people will need as much wiggle room in their budgets as possible to cover their costs over the coming months and we could see older workers deciding to remain in the workforce for longer than initially planned. After years of growth the pandemic saw a contraction in the number of older workers with many choosing to retire – the current difficult circumstances mean many will look to reverse this decision.”
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