Higher earners have a “misplaced confidence” towards money which sees many underestimating how much they need to save into their pension, as well as a “severe lack of knowledge” around what’s needed for a comfortable retirement.

Brewin Dolphin’s ‘Relationship with Money’ report revealed 34% of those earning £50,000 a year are confident about money, but this is at odds with their understanding in other areas of finance, such as saving for retirement and investing.

Half this cohort (46%) did not invest beyond their pension. And a quarter of those earning between £100,000 to £150,000 admitted they don’t invest.

A third said investing is too risky while 23% of those earning between £100,000 and £149,000 claim they have no spare money to invest.

More women (40%) than men (23%) worried about their lack of understanding when it came to investing.

Meanwhile those earning £50,000+ said they would like to retire at the age of 58, but based on their current financial planning, they won’t be able to retire until the age of 64.

For half (53%), they don’t believe or aren’t sure if they will have enough to retire comfortably in their later years.

The average amount the 2,000 polled believe they will need for a comfortable retirement is £510,000. Split between the sexes, men think they will need £548,000 compared to women’s £471,000 figure as ‘satisfactory’.

But given the high inflation, it could mean that in 10 or 20 years’ time, the amounts people will need is “significantly higher”, Brewin Dolphin said.

Its calculations showed that if someone retired at 64 with a £251,000 pension pot and wanted their savings to last to age 90, they would have to limit their retirement income to just £13,500 a year.

Those with a £500,000 pension pot would see an income of £26,500 a year to age 90 (based on 5% growth after charges). If they qualify for the full state pension, this would add around £9,600 a year in today’s terms, bringing the totals to just over £23,000 and £36,000, respectively – but still lower than the £50,000+ a year that higher earners are used to.

Robin Beer, CEO at wealth manager, Brewin Dolphin said, “The fact our research focused on higher earners – who one might expect to be better prepared than the general population – suggests that we are facing a wider societal problem in terms of saving for the future. With the cost of living continuing to rise, saving more today is a tough ask. Yet if we are to look forward to a financially secure future, it is vital that we find ways to bolster our long-term finances.”

Menna Cule, financial planner, Brewin Dolphin, warns: “Confusion reins around how much is needed for retirement with even higher earners at risk of falling short of their goals and running out of money in later life. Our research has found that people who have not properly planned are overly ambitious when it comes to when they expect to be able to retire – with our dream versus reality nearly six years out of sync.

“We can sell ourselves a reality that may not actually be true and a lack of understanding is a huge factor. This is where the value of smart advice from a financial adviser truly comes to its full potential. “Telling people to save for their retirement is a really tough message at the moment. The cost-of-living crisis is only just starting to bite, and many people don’t have any money left after buying food and paying their bills. We know many people cannot afford to save for their retirement.”