High net worth (HNW) savers are underestimating the amount of money they need to save for a comfortable retirement by around £300,000, according to a new report.
HNW savers expect to need a pension pot of £539,000 on average to achieve a comfortable retirement, according to research by wealth manager and Financial Planning firm Saltus.
This is an underestimate of around £300,000 as pension savings of around £825,000 are needed in order to achieve a retirement of £33,000 per year, the annual income the PLSA calculates is needed for a comfortable retirement.
Only one in ten respondents estimated they would need a pension pot of over £800,000 for a comfortable requirement.
HNW savers told Saltus that a couple would need £55,000 per year to fund a comfortable retirement.
One in eight (16%) said they would need over £70,000 a year in retirement, which would require pension savings of £1.75m.
Michael Stimpson, partner at Saltus, said: “Our research reveals a huge gap between expectation and reality when it comes to how much money is needed for a comfortable retirement.
“We can see that the vast majority of respondents are underestimating by quite some margin. This is especially worrying given inflation is now at 9.1% and rising. In the short term at least, these inflationary pressures will only increase what people feel they need to spend to live comfortably.
“Moreover, with rising life expectancy, pension pots are going to have to last longer and longer. All taken together this highlights the importance of financial planning and saving for the future, no matter your level of wealth.”
Those aged between 25 and 44 were most likely to underestimate the savings needed for a comfortable retirement the most, with the majority thinking a pension pot of just over £500,000 would be enough.
Higher earners were most likely to estimate correctly how much they needed to save into pensions for a comfortable retirement.
Those with investable assets of over £3m estimated they would need a pension pot of £698,000 to finance a comfortable retirement.
The Saltus Wealth Index surveyed over 1,000 UK savers with investable assets over £250,000 between 28 February and 15 March.
