43.1% of Baby Boomer households coming up to retirement (aged below 65) are meeting the PLSA’s target for a moderate retirement income, according to the second Hargreaves Lansdown Savings and Resilience Barometer.
This is higher than the UK average (42.6%) but lower than the Generation X household average of 46.9%.
When it comes to having surplus income at the end of the month this group lags the average (50.5%) with only 46.6% having money left over.
Soaring energy bills could derail people’s retirement planning leading many older workers to delay retirement.
The PLSA standards say a single person would need a retirement income of £20,800 per year to achieve a moderate standard of living, while a couple would need £30,600.
Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown, said: “Baby Boomers on the cusp of retirement face a real crunch time as the cost-of-living crisis continues to bite. There is a lot of discussion about how the Baby Boomer generation have a better financial deal than those who came after them. They are more likely to retire with a final salary pension and to have benefited from the enormous house price inflation we have seen over the years. Many are sitting on a great deal of wealth.
“However, that certainly isn’t the case for everyone. Many have retired with generous pensions but given they have worked the majority of their careers in the pre-auto-enrolment world there are also those facing retirement with little, if any, pension wealth. Similarly, when it comes to home ownership – not everyone has been able to get on the housing ladder and so go through retirement either still paying off a mortgage or needing to find money for rent -it’s an enormous expense that really affects overall financial resilience.
“The HL Savings and Resilience Barometer looks at how the financial fortunes of those Baby Boomers aged under 65 stack up against those of younger generations. There’s a long way to go before we see the UK population achieve resilience in their retirement income – currently only 42.6% of households overall are on track for a moderate retirement income. Baby boomers fare slightly better than average but not by much – only 43.1% are on track for a moderate income and as their retirement years creep ever closer they are running out of time to get on track. And the current cost of living crisis is only making things harder.
“Looking more widely pre-retirement Baby Boomer households also have an issue when it comes to surplus income at the end of the month. With only 46.6% having adequate income left every month they lag the average (50.5%) as well as Generation X households who are much more resilient (54.9%). With inflation continuing to soar people will need as much wiggle room in their budgets as possible to cover their costs over the coming months and we could see older workers deciding to remain in the workforce for longer than initially planned. After years of growth the pandemic saw a contraction in the number of older workers with many choosing to retire, the current difficult circumstances mean many will look to reverse this decision.
“As expected, though Baby Boomer households are much more likely to have life insurance than their younger counterparts – a whopping 78.6% compared with 48.8% of Generation X and just 31% of millennial households. However, they do lag when it comes to other types of insurance such as income protection and critical illness.”
