The percentage of people in the UK not on track for even a “minimum retirement lifestyle” has worsened from 35% to 38% since 2023, equating to an extra 1.2 million people, according to Scottish Widows’ 20th annual Retirement Report.
The report shows most people would like retire at the age of 62, but 54% think they will have to work longer than they would like, on average by seven years, and 27% don’t feel they will ever be able to retire.
The report said the UK state pension plays a vital role in meeting day-to-day costs for 75% of current retirees, but future retirees are worried it may not be there to benefit them.
About 54% of UK retirees expect to work longer than they would like, on average by seven years, highlighting the gap between people’s desired retirement age and the adequacy of pension savings.
In addition to that, 27% of those who have made retirement plans don’t feel that they would ever be able to afford to do it.
The Scottish Widows report also shows that younger people would like to retire even earlier, with those aged 18-29 wanting to retire at 61 and only “prepared” to work until they reach 64 if necessary — four years short of the age at which they will be able to access their state pension.
Only 34% of respondents think they are currently preparing adequately for retirement, and 38% are not on track for what the Pensions and Lifetime Savings Association (PLSA) deems as even a minimum retirement lifestyle.
This is 3% higher than last year and is equivalent to an additional 1.2 million people in that situation.
The increase in those projected to suffer the poorest retirement outcomes has been driven by rises in the cost of living — for example, rents which have gone up 15% — relative to the growth in wages at an average of just 6.2%.
Survey respondents also emphasised people’s reliance on the state pension. About 54% expect the state pension to eventually form a meaningful portion of their retirement income, with 75% calling it hugely important in helping them pay for everyday necessities.
About 12% of people are not convinced this level of help will be available to them by the time they retire.
Pete Glancy, Head of Pensions Policy at Scottish Widows, said: “The growing gap in retirement outcomes and people’squality of later life, between those who are currently retired and those who will retire in the future, is of great concern.
“However, people are starting to think about how their private pension pot might interact with their State Pension Entitlement to plan their retirement.
“But, there is still a real reliance on the State Pension, and while some will be able to use their private pension pot to give them the flexibility they are looking for in terms of retirement age, it’s only starting to dawn on others that they may end up working for much longer.
“It is likely to be a long time before Britain has been saving enough to give future pensioners the outcomes they hope for. In the meantime, helping people to make the very most of what they have is going to be critical.
“It’s the right moment f or 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.
“At present only the wealthiest tend to rely on professional support from a qualified financial adviser. As an industry, we need to find a way to give people better support in making good financial decisions at a price more savers are willing and able to pay.”
The research for the report was conducted online by YouGov across 5,072 nationally representative adults aged 18+ in the UK between 21/03/2024 – 05/04/2024.
The report uses the Pension and Lifetime Savings Association (PLSA)’s living standards as a measure. The PLSA defines a minimum retirement as someone living with no car, spending £50 per week on groceries.