Individuals with assets of more than £250,000 think they will need a pension pot of £663,308 to achieve a ‘comfortable retirement’, research by Saltus has revealed, despite the firm finding that, in most cases, a pot of at least £1.5m is needed.

The research asked UK adults with more than £250,000 in assets how much they think they will need in their pension pot to retire comfortably, which according to the Pensions UK Retirement Living Standards needs to provide an annual income of £43,900.

The research showed that 18 per cent of respondents believed they would need an individual pension pot of between £401,000 and £600,000 for a comfortable retirement, while 13 per cent believed they would only need between £201,000 and £400,000.

However, Saltus found that, once inflation is considered, in most cases a pot of at least £1.5m is needed, increasing to £2.5m for younger respondents, suggesting that this group are “significantly underestimating” how much money they will need to achieve their desired retirement.

The research also found that the difference between what high-net worth individuals (HNWIs) have in their pension pots and what they need is even larger, with shortfalls between £250,000 and £950,000 depending on their age.

The firm said that even when the state pension is accounted for, many of those aged 54 and over will still fall short.

The research indicated that the average pension pot for respondents is around half a million pounds (£520,052), while annual contributions are around £30,000.

This means that, based on a cautious 4 per cent annual investment return, most HNWIs will fall “significantly” short if they want to retire at 67 on an income of £44,000 per year (in today’s terms).

Despite growing awareness around the need to save for retirement, the Saltus Wealth Index Report showed that 8 per cent are contributing the maximum £60,000 allowed in pension savings per year.

Although, the index showed that average planned contributions are gradually rising - from £28,198 last year to £30,018 this year - the rate of saving continues to “lag behind” what is needed to meet retirement expectations.

The index also revealed that 12 per cent of the 73 per cent of HNWIs who are providing regular financial support to adult children or grandchildren are funding this support by either dipping into their pension pots or reducing their contributions. 

Saltus partner, Mike Stimpson, said there is a “clear disconnect” between expectation and reality in retirement planning with many high earners assuming they are on track, but the findings suggest otherwise.

Stimpson said it is “concerning” that most people are falling short of their retirement goals, especially as pension pots are increasingly used to support families or cover rising living costs. 

He also highlighted the added complexity that inheritance tax changes from April 2027 will bring to planning, suggesting that this could make pensions “less attractive” as a wealth transfer tool, particularly for high-net-worth individuals who rely on them to pass on wealth. 

“Still, the £60,000 annual pension allowance remains a powerful way to build wealth tax-efficiently, but with demands on savings coming from many directions, planning is more important than ever,” Stimpson added.

To support improved long-term planning, Saltus has launched a pension calculator designed to help individuals assess whether they are on track to achieve their desired retirement income.  

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