Just over half (51 per cent) of UK baby boomers are on track to meet their retirement goals, with the rest expected to fall short of the income needed to maintain their current lifestyle or achieve a moderate standard of living in retirement, research from Vanguard has found.

The Vanguard Retirement Outlook report revealed wide variation in retirement readiness across income groups and depending on the spending goals used.

When assessing retirement preparedness relative to income, a U-shaped pattern emerged: both low- and high-income individuals were more likely to be on track, while middle-income earners were most at risk of falling short.

However, applying an absolute spending measure changed the picture significantly, as the proportion of low-income individuals on track dropped sharply from 74 per cent to just 22 per cent.

The analysis also assessed baby boomers' readiness using the Pensions UK Retirement Living Standards (RLS), including both minimum and comfortable thresholds.

While some low-income individuals were technically classed as "on track" due to reliance on the state pension, the income it provided still fell short of the minimum RLS benchmark.

Middle-income savers faced the greatest challenges across both measures, with just four in 10 meeting key readiness thresholds.

In contrast, high-income individuals appeared well-prepared for retirement under both frameworks, with 75 per cent on track under an absolute spending goal, compared to 62 per cent using a relative one.

Meanwhile, despite the shift from defined benefit (DB) to defined contribution (DC) pensions across the workplace landscape, the report found DB wealth remained "substantial" among baby boomers.

A majority (58 per cent) of the sample had at least some DB savings, a factor which strongly correlated with better outcomes.

According to Vanguard, individuals with DB pensions were more than twice as likely to meet their target replacement rate as those without.

Under the moderate RLS, this gap widened further, with those receiving DB income four times more likely to reach their spending goals.

This effect was most pronounced among lower-middle and middle-income cohorts.

Overall, the report found that 69 per cent of baby boomers with DB pensions were on track for retirement, compared to just 28 per cent of those without.

Commenting on the findings, Vanguard Europe senior investment strategy analyst, Georgina Yarwood, said: "It is concerning that half of UK baby boomers aren't on track to meet their retirement goals, given the demographic's proximity to retirement.

"Planning for retirement can feel complex and overwhelming. However, there are steps people in or approaching retirement can take to improve their financial position - including delaying retirement, phasing into it gradually, making use of home equity, and reassessing spending goals."

Looking ahead to future generations, Yarwood added: "For younger savers, it's a good idea to start early. Many only begin to engage with retirement planning three to five years before they intend to retire.

"Time is an asset. By saving consistently and investing early, younger generations can benefit significantly from the power of compounding."

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