Higher earners are “squandering an opportunity” to get back on track with their retirement savings and long-term financial planning, Hargreaves Lansdown has warned.

The firm noted that many people had scaled back their longer-term plans over the past few years, with the cost-of-living crisis coming just after the Covid-19 pandemic resulting in a “tough” few years.

This had resulted in many sitting on their savings in fear of further hard times, and Hargreaves Lansdown highlighted that 65 per cent of households and 92 per cent of higher earners had enough emergency savings.

However, it warned that many were falling short on longer-term plans, with just 36 per cent of individuals on track for a moderate retirement income.

Furthermore, just 39 per cent of higher earners were on track for a comfortable retirement, and this figure is falling.

“For above average earners, the worst is behind them,” stated Hargreaves Lansdown head of personal finance, Sarah Coles.

“The problem is that the siege mentality may have set in, so they may be squandering the opportunity to get back on track by erring too far on the side of caution.

“Financial advisers say we should have cash to cover three-six months’ worth of essential spending, which means we’ve gone from having too little set aside to some people having more than they need.

“This has been particularly skewed towards higher earners, so that while 65 per cent of households have enough emergency savings (up from 63 per cent a year earlier), 92 per cent of the highest fifth of earners do. And this trend is expected to continue.”

While Coles noted that building up savings was positive, there was a risk people were doing so at the expense of their finances, including pensions.

“Among the highest fifth of earners, 68 per cent are on track for a moderate retirement income, but in reality they will be used to a higher standard of living, so many should be aiming for a comfortable retirement – only 39 per cent are on track for that,” she said.

---