Falling house prices and inflation now pose a dual threat to the retirements of middle-income earners in particular, a report warns.
Pension plans are in disarray for those who own neither enough equity in their homes to shield from price falls, nor the profit from sales to boost their income in later life.
The value of any nest eggs has also been hampered by two years of inflation rises eroding pensions.
Retirement resilience scores for the third and fourth earning groups are due to fall by 1.6 and 1.9 points respectively, compared to just a 1.1- point loss for the highest earners.
Commenting on the the Savings and Resilience Barometer forecast by Hargreaves Lansdown, Helen Morrissey – its head of retirement analysis – said: “The cost-of-living crisis tore chunks out of our savings while spiralling inflation pushed up the cost of a moderate retirement.
“The share of households on track for a moderate retirement income has fallen back to 39% and life may get even more difficult in 2024.
“Inflation may have fallen from the eye-watering heights seen last year but remains much higher than the Bank of England’s 2% target.
“This will continue to push up the amount people need to save for retirement at the precise point when they may have less to put away.
“Added to this, the house price falls we started to see in 2023 look likely to continue. We examined the impact of a 5.9% fall during 2024 and found it would particularly affect middle earners, who typically hold lower equity shares in their property and so are more vulnerable to falls in property prices.”
It comes as 34% of 2,100 customers of HSBC bank said in a survey that they do not feel confident about their financial resilience and ability to withstand unexpected expenses.
Just less than half (49%) said their finances had improved or remained stable, while a slightly smaller 47% said their finances had worsened.
The lender’s Steve Reay said: “While it’s reassuring to see there is a level of financial optimism, it’s obvious the increased cost-of-living is still a source of concern for many.”
