Retirement resilience has dipped and is expected to fall further during 2024 as house prices continue to fall and asset values fail to rise in line with inflation.

The latest version of the six-monthly HL Savings and Resilience Barometer has reveals potentially tough times for consumers.

Middle income earners (those in the third and fourth quintiles) could be hit hardest with retirement resilience scores expected to deteriorate by 1.6 and 1.9 points respectively.

That compares to just a 1.1 point reduction for the highest earners.

The deteriorating scores in the middle income group is because homeowners in the third and fourth quintiles typically hold lower equity shares in their property, making them more vulnerable to falls in house prices.

On top of that, the rise in asset prices has failed to counterbalance the effects of rapid inflation on the savings required for a moderate retirement income.

Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, said: “The percentage of households on track for a moderate retirement income has fallen back to 39% and ongoing turmoil looks set to make life even more difficult in 2024.”

She said high inflation will continue to push up the amount people need to save for retirement at precisely the point in time when they may have less to put away.



There’s also the prospect that the house price falls experienced in 2023 will continue, with the latest data from the barometer modelling the impact of a 5.9% fall during 2024. Ms Morrissey said: “Such a fall would particularly affect middle earners.” 

According to the data overall financial resilience fell in 2023, after the cost of living increased 18.4% in two years. However the resilience gap between higher and lower earners is widening, said Sarah Coles, head of personal finance at Hargreaves Lansdown.

She said: “For higher earners, life has actually been getting easier. The highest fifth of earners have seen the proportion scoring ‘good’ or ‘great’ for overall financial resilience rise from 77% in 2019 to 86% at the end of 2023. Meanwhile, lower earners are still being clobbered by the cost-of-living crisis. The lowest fifth of earners with ‘good or ‘great’ scores fell from 3% to 2%.”

• The HL Savings and Resilience Barometer is analysis done every six months in partnership with Oxford Economics, bringing together 16 measures from official datasets and using statistical modelling to build an overarching picture of people’s financial resilience - from how much savings they have, to whether they’re on track for a reasonable retirement income.