High earners underestimate how much they need to retire comfortably
High net worth individuals grossly misjudge how much money they need for a comfortable retirement, new data shows, with many not saving enough.


The UK’s rich are underestimating how much they need to put in their pensions in order to have a comfortable retirement by almost £1 million.
High net worth individuals (HNWI), defined in this instance as those with over £250,000 in liquid wealth that could be managed or invested, believe they will need an individual pension pot of just £660,000 to retire comfortably, when in reality they will need at least £1.5 million, new data from Saltus shows.
In order to retire comfortably, Pensions UK’s (formerly the PLSA) retirement living standards report says a single person will need an income of around £43,900 a year to provide financial freedom while still enjoying some luxuries.
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A retiree would need a pension pot size of around £1.5 million to facilitate this yearly income, according to Saltus’s Pension Calculator.
The size of the pot balloons for savers further from retirement age.
When accounting for inflation, a pension pot would need to be around £2.5 million to fund a comfortable retirement for someone who is 44 today.
In a survey of 2,000 HNWIs, the average respondent thought a pension pot of £663,308 would be enough to fund a ‘comfortable’ retirement.
Some respondents thought that this would be lower, with 18% thinking a pot between £401,000 and £600,000 would be enough, and 13% believing a pot of between £200,000 and £400,000 would be large enough to retire comfortably.
“We’re seeing a clear disconnect between expectation and reality in retirement planning,” says Mike Stimpson, partner at Saltus.
“Many high earners assume they’re on track, but the findings suggest otherwise. It’s concerning that most people are falling short of their retirement goals, especially as pension pots are increasingly used to support family or cover rising living costs.”
Furthermore, Stimpson said that changes to inheritance tax that make unused pension count towards an estate will “further complicate” planning your pension pot.
He said it “could make pensions less attractive as a wealth transfer tool, particularly for high net worth individuals who rely on them to pass on wealth”.
Are Brits saving enough to retire comfortably?
Most pension savers will not grow their pensions enough to attain a comfortable retirement, according to Saltus’s wealth index, with shortfalls climbing as high as £950,000 for some.
The average 64 year old has a mean pension pot of £518,119, contributing £17,025 to it a year, data shows.
Assuming a cautious 4% return on their investment, their pension pot would grow to around £611,618 by the time they retire, making the shortfall between their pots and the amount required for a comfortable retirement a staggering £952,027.
When deducting the amount received from the state pension, the shortfall declines to £526,538 – the equivalent of almost £16,000 a year when assuming a life expectancy of 100.
Meanwhile, the average 44 year old has a bit more time to mend the shortfall between their pension savings and their desired lifestyle in retirement.
For those aged 54, a mean pension pot of £532,906 with £30,239 contributed annually would land them a total pot of £1,263,302 when they retire. However, this results in them being £738,296 short of funding a comfortable retirement.
Thankfully, when accounting for the money they will get from the state pension, the shortfall falls to just £193,634. With some smart saving measures, 54 year olds have time to boost their pension pots and reach a comfortable retirement.
Meanwhile, the average 44 year old has a lot less to worry about when it comes to their pension shortfalls.
British 44 year olds have a mean pension pot of £498,276, and contribute £35,105 to it every year. Assuming the same investment returns and an inflation rate of 2.5%, Saltus estimates that they will have £2,562,215 by the time they retire – a shortfall of £292,929 in their individual pension.
However, when adding the state pension on top of these contributions, the shortfall falls to zero, meaning that the average 44 year old in the UK will grow their pension pot large enough to secure a comfortable retirement.
This being said, there are growing concerns that maintaining the state pension could become unsustainable without reform, as outlined by the Institute for Fiscal Studies in their Pension Review.
It could therefore be wise for savers to make sure that they will have a comfortable enough pension pot without help from the state to ensure they will not be caught out.
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Daniel is a digital journalist at Moneyweek and enjoys writing about personal finance, economics, and politics. He previously worked at The Economist in their Audience team.
Daniel studied History at Emmanuel College, Cambridge and specialised in the history of political thought. In his free time, he likes reading, listening to music, and cooking overambitious meals.
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