Wealthy individuals may be underestimating the large sums required for a financially secure retirement.
A comfortable retirement requires a substantial pension pot, and for high net worth individuals in the UK, this figure is estimated to be around £3 million or more, according to wealth management firm Saltus.
Saltus, which specializes in advising high net worth clients, typically works with clients whose investment portfolios and pension pots are of this scale or greater. The firm's client funds total £9 billion, suggesting that their clients require advanced retirement and estate planning.
The exact pension pot size needed for a comfortable retirement isn't explicitly stated by Saltus, but their services and clientele imply aiming for a pension pot well into the millions. For those who want precise target figures specific to Saltus, it's recommended to contact the firm directly or consult their detailed client advisory materials.
According to Saltus's Pension Calculator, a pension pot size of around £1.5 million is needed to facilitate an income of £43,900 a year. However, when accounting for the state pension, the shortfall for a 54-year-old falls to £193,634, and for a 64-year-old, it increases to £526,538.
These figures highlight the significant gap between the pension pots that high net worth individuals currently have and what they need for a comfortable retirement. In a survey of 2,000 high net worth individuals, the average respondent believed a pension pot of £663,308 would be enough for a comfortable retirement, which is significantly lower than the estimated requirement.
Mike Stimpson, a partner at Saltus, stated that there is a disconnect between expectation and reality in retirement planning among high earners. He also mentioned that most people are falling short of their retirement goals and that pension pots are increasingly used to support family or cover rising living costs.
Moreover, Stimpson pointed out that changes to inheritance tax that make unused pension count towards an estate could make pensions less attractive as a wealth transfer tool, particularly for high net worth individuals who rely on them to pass on wealth.
In terms of income, a single person needs an income of around £43,900 a year to have financial freedom and enjoy some luxuries in retirement, according to Pensions UK's retirement living standards report. This income level, however, is out of reach for many high net worth individuals, given the current state of their pension pots.
In conclusion, while the exact pension pot size may vary depending on individual circumstances, high net worth individuals in the UK should aim for a pension pot well into the millions to ensure a comfortable retirement. It's crucial to seek professional advice and regularly review and adjust retirement plans to account for changes in personal circumstances, investment returns, and tax laws.
For high net worth individuals in the UK, aiming for a pension pot well into the millions is essential to secure a comfortable retirement, as suggested by wealth management firm Saltus, which caters to clients with investment portfolios and pension pots of such scale or greater. Regularly reviewing and adjusting retirement plans, seeking professional advice, and considering the impact of changes in personal circumstances, investment returns, and tax laws are crucial. Despite being unaware of the exact pension pot size required, many high net worth individuals are falling short of their retirement goals, often relying on their pension pots for family support or to cover rising living costs, as highlighted by Mike Stimpson, a partner at Saltus.
