High earners have been warned they may end up with nowhere near enough income in retirement to maintain their standard of living.
Research from Hargreaves Lansdown found just 30 percent of high earners are on track for what is deemed a “comfortable” retirement, which is £37,300 for a single person and £54,500 a year for a couple, according to the Pensions and Lifetime Savings Association (PLSA).
Just seven in 10 top earners are on track for a moderate retirement which the group warned may be “nowhere near” enough to meet their needs.
Helen Morrissey, head of retirement analysis, said: “The likelihood is that a moderate income will nowhere near meet their needs.
“The PLSA’s moderate retirement income is pegged at £23,300 per year for a single person and £34,000 for a couple. If you’ve been used to lavish holidays a couple of times a year, then the two weeks in Europe afforded under this standard just isn’t going to cut it and you are going to need to make some difficult decisions on your spending.”
The latest figures for the Hargreaves Lansdown Savings and Resilience Barometer showed higher earners have seen their overall financial resilience improve while lower paid households are worse hit by the rising cost of living.
Ms Morrissey said of high earners: “If these households are in a position where they can save more, then boosting contributions into a pension should be an important consideration.
“Keeping track of how your pension planning is progressing is really important. You need to think about what you want from retirement and put a plan in place to help you get there.
“There are lots of calculators online that can help you model how much you are on track to get, and if you are falling behind you have the time to make up the gap by contributing more.
“If you do find you are running behind what you were hoping for then it is important not to despair – it’s never too late to make a difference.”
Other ways to boost your pension
Employer matching contributions – This is when an employer increases their contributions if the employee does as well. Ms Morrissey said: “It’s well worth checking if your employer offers this as it can significantly improve your overall pension contribution.”
Tracking down lost pensions – The average reclaimed pension pot is worth around £9,000, with £26billion in lost pensions out there. You can check for lost pensions using the Government’s Pension Tracing Service
Consolidate – Once you have all your pensions, you may want to consolidate them, saving on costs and administration time. Ms Morrissey said: “Do check that you aren’t missing out on any valuable benefits such as guaranteed annuity rates by consolidating. Also check you aren’t incurring exit fees.”
You can also check your state pension entitlement using the state pension forcast tool on the Government website.
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