Less than 40% of people on track for 'decent' retirement

Less than 40 per cent of people in the UK are on track for a ‘decent’ retirement due to “a real lack of engagement with pension planning”, research from Hargreaves Lansdown revealed.

Its findings showed 39.7 per cent of people are on track to achieve the moderate level of income highlighted by the PLSA retirement income targets of £20,800 per year or £30,600 per year for couples.

Hargreaves Lansdown’s research also showed that younger savers are less likely to achieve this decent retirement as only 17.7 per cent of Generation Z are on course to hit the target, compared to 45.2 per cent of Generation X.

A similar gap was also revealed to exist with different incomes as 71.5 per cent of the highest income quintile are on track to hit the target but there is a sharp drop for the next highest income group to 47.2 per cent.

While this drop is quite steep, it is “not surprising” as higher income does allow greater ability to save for the future with larger contributions, the report stated.

Hargreaves Lansdown retirement analyst Helen Morrisey commented: “Most people would like to think they will be able to afford a few luxuries here and there during their retirement years, but this data shows we are way off track with less than 40 per cent of people on course to enjoy a moderate lifestyle in retirement.

“Without action many people face living only the most basic standard of living in their later years.

“Almost three out of ten of the very highest earners are not on track to hit this target – a surprise given the high level of income they receive.

“While some groups, notably Generation X, are making better progress, this may be because they are more likely to have benefited from final salary pensions.

“Others may have also started to take their retirements more seriously as they get older and so are putting more money into their pensions.

“Younger generations look far more exposed, with Generation Z in particular lagging when it comes to saving for retirement.”