The majority of higher earners expecting to maintain their current lifestyle in retirement are set for a disappointment according to the latest figures on savings.

How much are you hoping to be spending each year in retirement? According to savings and pensions experts HL, if you have your sights set on an income of around £25,000 per year for a single person and £36,480 for a couple, then you’re aiming for a “moderate” retirement.

If you are aiming higher – for a “comfortable retirement” – you’ll be looking at £38,662 per year for a single person and £58,480 for a couple.

However, according to the latest HL Savings and Resilience Barometer, while 69% of higher-earning households are currently on track for a moderate retirement income, only 39% are currently on track for a comfortable retirement income.

HL have moved away from Pension and Lifetime Savings Association (PLSA) definitions of moderate and comfortable retirement incomes due to recent methodology changes, but in fact their evaluation of what constitutes a moderate or comfortable retirement actually entails lower incomes than PSLA.

The PSLA defines a comfortable retirement as £43,000 pa for a single person and £59,000 pa for a couple. A “moderate retirement” by their definition requires £31,000 pa for a single person and £43,000 for a couple pa.

Why the difference in figures?

H&L recently moved away from the long-established recent Pension and Lifetime Savings Association’s Retirement Living Standards after the PLSA introduced a change to methodology whereby more aspirational items such as day trips were introduced as a result of people’s desire to spend more time with family and friends post pandemic.

This resulted in large increases in what was needed, particularly in the cost of a moderate retirement which increased by 26.8% for a couple and 34.3% for a single person. The cost of a comfortable retirement also increased but not to the same extent.

H&L have stripped those costs out, and so their target figures are lower.

What does all this mean for savers?

Key to anyone planning their retirement finances is to first establish a realistic target for their standard of living in retirement – and then check to determine if they are on course to meet that target.

The RetireEasy LifePlan is built specifically to enable ordinary savers to do just that.

Key in your data and a series of easy-to understand graphs give you a precise fix on whether you are on course… or whether you need to do anything differently.

7 things you can do to help fill the gaps

If you see a need to increase your savings and investments ahead of retirement, you could…

1. Increase your contributions. As a higher earner you will benefit from tax relief on your contributions of 40%, or even 45% so it’s an extremely tax efficient way to build your wealth.
2. If you receive a bonus, contributing a portion of that to your pension can also make a huge difference, your employer may also add national insurance savings.
3. It’s also well worth checking whether your employer is willing to contribute more to your pension if you increase yours.
4. Don’t forget State Pensions which will soon represent up to £12,000 pa – you can request a free forecast.
5. Track down lost pots which can add thousands of pounds to your overall pension.
6. Consider consolidating smaller pots but make sure you aren’t incurring expensive exit fees or losing out on useful benefits such as guaranteed annuity rates by doing so.
7. Check in with your RetireEasy LifePlan regularly to make sure you are on track to receive the retirement income you need.