A new report by Scottish Widows has revealed a worrying increase in the number of people who are unprepared for retirement. The 2024 Retirement Report shows that 38% of UK adults are not on track to secure even a minimum retirement lifestyle, up from 35% last year. This equates to an additional 1.2 million people, highlighting the growing financial challenges facing those planning for their later years.
The report found that most people would prefer to retire at 62, but more than half (54%) expect to continue working for an average of seven years longer than they had hoped. Over a quarter (27%) of respondents said they don’t feel they will ever be able to afford to retire. These figures underscore the widening gap between people’s retirement aspirations and the reality of their pension savings.
Younger workers are particularly affected. Those aged 18-29 said they would like to retire at 61, but expect they might need to work until they are 64. This is still well below the age at which they can access the State Pension, which currently stands at 67.
The research points to several factors contributing to the bleak outlook. Rising living costs, such as a 15% increase in rents, are outpacing wage growth, which is averaging just 6.2%. This has exacerbated the financial pressure on those saving for retirement, pushing more people into a situation where their future financial security is uncertain.
Reliance on the State Pension remains significant for many. Three-quarters (75%) of current retirees say the State Pension is crucial to covering day-to-day expenses, and over half (54%) of those surveyed expect it to form a meaningful part of their retirement income. However, concerns about the State Pension’s future availability persist, with 12% doubting it will be there by the time they retire.
Pete Glancy, Head of Pensions Policy at Scottish Widows, voiced concerns about the growing disparity between those already retired and future retirees. “The gap in retirement outcomes and people’s quality of later life is of great concern,” he said. “While some will be able to use their private pension to gain more flexibility, many are realising they may have to work far longer than expected.”
He added that there is an urgent need for government intervention to address these issues, emphasising the importance of helping people make the most of their savings. “It’s the right moment for the new government to take a holistic view on people’s financial resilience throughout life, paying particular attention to those whose retirement outcomes are predicted to be much lower.”
The report also highlights the limited access to financial advice. “At present, only the wealthiest tend to rely on professional support from a qualified financial adviser,” Glancy said. “We need to find a way to give people better support in making good financial decisions at a price more savers are willing to pay.”
Former marathon world record holder Paula Radcliffe MBE, who retired from professional running in her forties, has partnered with Scottish Widows to promote the report. Radcliffe reflected on her early retirement and the importance of planning: “It’s vital to think about your finances early and ensure your plans align with your life goals, so work can support you in the long term.”