High net worth individuals (HNWI) are significantly underestimating the amount of money they will need to achieve their desired standard of living in retirement, according to analysis from Saltus.

The wealth management firm asked 2,000 UK adults with over £250,000 in assets how much they think they will need in their pension pot to retire comfortably.

While Pensions UK (formerly the Pensions and Lifetime Savings Association) estimated an annual income of £43,900 was needed for a comfortable retirement, 13 per cent of HNWIs believe they would only need between £201,000 and £400,000 in total.

Nearly one in five (18 per cent) expected to need an individual pension pot of between £401,000 and £600,000.

Although HNWIs, on average, believed £663,308 would be sufficient for a comfortable retirement, the Saltus Pension Calculator estimated that, when inflation was taken into account, at least £1.5m was needed in most cases.

Furthermore, the difference between what HNWIs had in their pension pots and what they needed was even larger, with shortfalls of between £250,000 and £950,000 depending on age.

Saltus warned that, even when the state pension was taken into account, many HNWIs aged 54 and over will fall short.

The average pension pot among respondents was £520,052 and annual contributions averaged £30,018.

Saltus’s Wealth Index Report found that just 8 per cent of HNWIs were contributing the full allowance of £60,000 a year, despite growing awareness around the need to save for retirement.

Furthermore, 12 per cent of the HNWIs who are providing regular financial support to adult children or grandchildren were funding this support by either taking money from their pension pots or reducing their contributions.

“We’re seeing a clear disconnect between expectation and reality in retirement planning,” said Saltus partner, Mike Stimpson.

“Many high earners assume they’re on track, but the findings suggest otherwise. It’s concerning that most people are falling short of their retirement goals, especially as pension pots are increasingly used to support family or cover rising living costs.

“Planning is further complicated by inheritance tax changes from April 2027, when unused pensions and certain death benefits will count towards an estate. This could make pensions less attractive as a wealth transfer tool, particularly for HNWIs 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.”

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