Who is winning the “retirement resilience race”?

25th March 2024 by RetireEasy

It’s not just how much you earn that helps individuals enjoy a “resilient retirement” as a new survey has just revealed…

While how much you earn will play a big part in helping individuals and couples enjoy a comfortable retirement, other factors do come into play according to new research from Hargreaves Lansdown, published as part of their latest Savings and Resilience Barometer.

For instance:

  • Homeowners (51%) and couples without children (47%) are doing better than average when it comes to being on track for a “moderate retirement income” as defined by PLSA’s Retirement Living Standards.
  • This compares starkly with single parent households, where only 17% are on track.
  • Public sector workers (64%) and those working for large companies (56%) are also doing better than average.
  • Some 69% of high-income households are on track for a “moderate income”… leaving 31% who aren’t.
  • But that’s better than the average across all income brackets, with only 39% of households on track for a moderate retirement income.Says Helen Morrissey, head of retirement analysis at Hargreaves Lansdown: “Building a decent retirement pot is hard, but the chances are that if you own your own home, work for a big company, or live with someone other than a child then you are doing better than most.“Your mortgage costs might be a squeeze right now, but you are working towards an asset that you will own one day and shield you from volatile rental costs.”

    Employees of larger firms also tend to do well, based on the fact they are likely to get better benefit packages. Public sector workers are at the top of the pile here, with those enjoying final salary pension provision meaning almost two-thirds (64%) of households are on track for a moderate retirement.

High incomes don’t always mean comfortable retirements…

High earners, as you may imagine, are doing well, with almost seven in ten on track for a moderate retirement income. But there is a catch. If you are used to earning a high income – say £75,000 plus – throughout your working life, then a moderate retirement income is likely to represent a big drop in your living standards. But only 30% of households in this group are in line for a comfortable level of income in retirement – so there could be some nasty shocks in store.

“However,” adds Helen, “It’s never too late to make a difference if you feel you are behind with your retirement planning. Taking small steps such as increasing pension contributions every time you get a pay rise or new job can make a significant difference to how much goes into your pension. You can also see if your employer will pay in more if you do. This is known as an employer match and can mean you get a significant uplift to your pension without necessarily having to put in much more yourself.”

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