It’s not just your salary that could impact the amount of money you have to retire.
The area where you live can dramatically impact your pension prospects too, new research reveals.
Hargreaves Lansdown’s Savings and Resilience Barometer has crunched the numbers to show how on track households are around the country for an adequate income in retirement.
And the honour of the pension resilience hotspot goes to Craven, an area in West Yorkshire which includes the towns of Skipton, Settle and Bentham.
In fact, a number of Yorkshire areas come out on top – but there are some surprising places lurking at the bottom of the list.
So where does your area rank?
Solid savers: Households in Craven are most on track for a decent retirement income
Yorkshire and Wales are most pension resilient
Yorkshire and the Humber and Wales each feature three times in the list of the top ten most resilient retirement spots.
Even though Craven tops the list, just a little over half of households are on track for a decent retirement at 56.1 per cent.
That means a huge 43.9 per cent of households aren’t on track, highlighting the pension savings gap which exists across the country.
Helena Morrisey, of stockbroker Hargreaves Lansdown, says: ‘It’s clear that even the top performing areas still have a lot to do when it comes to preparing for retirement.
‘It’s hugely important to take the time to think about what you want your retirement to look like, so you can see how close you are to achieving it.
‘Online pension calculators can be really useful in showing what you are on track for. If you are falling short of where you need to be you can model the impact of increasing your contributions over time.’
After Craven it is South Hams in Devon, which includes Salcombe and Totnes, (55.8 per cent), Eden in the north west (55.3 per cent) and West Devon in the south west (54.8 per cent).
Noticeably, areas in the south east and London don’t feature in the most resilient retirement hotspots. Morrisey says that the higher salaries in those areas can partly explain this.
‘Rather than using a pounds and pence measure, our barometer uses a rate whereby people aim for a retirement income that hits a specific percentage of their pre-retirement salary,’ she says.
‘This means they can maintain their pre-retirement lifestyle when they finish work and enjoy doing the things they used to when they worked.’
In places where people typically earn more, it may be harder for their pension to hit that percentage of their pre-retirement income.
Continuin the list of locations where people had enough saved for retirement, York came in fifth place at 53.5 per cent, Ryedale in North Yorkshire followed at 53.2 per cent and Powys in Wales came in seventh, also at 53.2 per cent.
Finishing up the list is East Lothian in Scotland at 53.1 per cent, Flintshire in Wales with the same amount of households and Pembrokeshire, also in Wales, at 53 per cent.
Londoners at bottom of the pension ladder
Savers in the capital are the least pension resilient. All ten of the bottom areas on Hargreaves Lansdown’s barometer are in London.
Islington, an affluent area in the north east of the capital, is the bottom with just 25.5 per cent of households on track for an adequate retirement fund.
This is closely followed by the borough of Kensington and Chelsea, and also Westminster, where just 25.7 per cent and 26.3 per cent of households are on track for a decent retirement income, respectively.
While earnings are typically higher in London, the cost-of living is also sky-high and house prices – while slowing – have soared beyond the rest of the country.
This makes it far more difficult for savers to put some money aside for retirement as they battle surging everyday living costs while balancing saving up for a house deposit.
Morrissey says: ‘This exposes two challenges that don’t get spoken about often enough. For a start, the higher cost of living in the south east can make it harder to free up enough cash to save for the future as they are balancing high costs in mortgages, rents and travel.
‘However, these households will need to save more as they will need a bigger pension to meet these higher living costs when they come to retire.’
Southwark (26.6 per cent), Camden (27.8 per cent), the City of London (27.9 per cent) and Tower Hamlets (28.3 per cent) follow.
Finishing up the bottom ten are Greenwich where just 28.5 per cent of people are pension resilient, Lambeth at 28.7 per cent, and the borough of Hammersmith and Fulham at 29.3 per cent.
‘The other issue is that people may not actually know they are under saving for retirement as they think the levels stipulated by their scheme will be enough,’ Morrissey adds.
‘This is something that could sting high earners who have the extra cash, but don’t realise that they need to be saving more to meet their retirement needs.
‘For these people there could be a nasty shock in store when they realise they are nowhere near where they need to be.’
Auto-enrolment will funnel all workers into a workplace pension scheme at age 22 when they earn £10,000 a year. However, the minimum contribution from a worker is 5 per cent, with their employer then putting in 3 per cent.
This is rarely enough to build a substantial retirement income which will allow you a comfortable standard of living.
Plus, some employers are able to match your contributions but may not make it clear they can do so.
What can you do to be resilient for retirement?
If you’re fast approaching retirement, you can make some last-minute moves to bolster your savings.
First, look for any lost pension pots. Contact former employers to check on those which may be missing, or use a free app like Gretel which will do the hard work for you. Some £31.1billion is currently sitting in unclaimed or inactive pension pots, which could make a significant dent in the housing crisis.
Morrisey says: ‘You may decide that once you’ve found all your pension together it might make sense to consolidate. This can save you time, money and admin. It can also really improve your retirement decision making as you will view one large pot very differently to several small ones.
‘However, before you take the plunge and consolidate make sure you aren’t incurring expensive exit fees or missing out on benefits such as guaranteed annuity rates which can give your income a real boost.’
Delaying retirement is another option, as your state pension payments are uplifted by 2.5 per cent for each year you delay claiming.
Reconsider your pension investments, too, as default funds are likely to be conservative or low risk. If you are happy to take on more risk so close to retirement you could consider switching funds.
If you’re earlier in your career it is easier to make significant changes to your retirement prospects.
Morrisey adds: ‘Making small changes like boosting your pension contribution every time you get a pay increase or promotion can make a big difference.
‘You can also check to see if your employer will boost their contribution if you increase yours – this is known as the employer match.’
