Less than two fifths (39 per cent) of the highest earners are on track for a comfortable retirement income, according to data from Hargreaves Lansdown's (HL) savings and resilience barometer.

The barometer estimates that a moderate retirement for a single person would cost £26,129 per year, and a comfortable one would cost £41,829.

HL used the Pensions and Lifetime Savings Association (PLSA) retirement income standards until 2024 but opted to update in line with inflation following a change in methodology.

The latest update using this method revealed that 68 per cent of the highest-earning households are on track for a moderate retirement income, compared to 36 per cent overall.

HL head of retirement analysis, Helen Morrissey, said the data showed a "retirement reality check" awaited higher earners, as many were way off the mark with their pension savings.

She stated: "Only 68 per cent of the top fifth highest earning households are on track for a moderate retirement income. This may not sound like a problem, but when a moderate retirement income is measured at £26,129 per year for a single person, this will be far less income than many high earners want or expect.

“Instead, these higher earners will expect a more comfortable lifestyle that aligns with what they've enjoyed while working. However, with this costing around £41,829 per year, only around 39 per cent are on track, meaning there's a nasty surprise in store for the rest.

“The issue of pension adequacy will be a key part of the government's pension review to determine how we can get more people to save more for retirement,” added Morrisey.

To reach their retirement goals, Morrisey suggested that savers must "fill the gap" between their spending target and current savings.

“You can save up to £60,000 per year into a pension and still benefit from tax relief at your marginal rate.

“In addition, using the 'carry forward' process, you can use any unused annual allowances in the three previous tax years. This means that if you earn enough, you can contribute up to £200,000 this tax year, which can plug a sizeable gap in your retirement planning.

“If you are lucky enough to get a bonus, you can use bonus sacrifice to make a tax-efficient contribution to your pension. You won't pay income tax or national insurance on your contribution, so the full amount goes into your pension, and there is the added benefit that it reduces your overall salary, which means you pay less tax.

“Making the most of your employer's contribution can also have a huge impact. Sometimes, your employer will boost their contribution to your pension if you increase yours - the so-called employer match."

---