A concerning new report from Scottish Widows reveals that nearly four in ten people in the UK are at risk of being unable to afford even the most basic standard of living in retirement.
The research, conducted in partnership with Frontier Economics and based on a YouGov survey of over 5,100 people, shows a sharp increase in the number of individuals facing financial insecurity in later life. In 2023, 35% were deemed to be falling short of a minimum retirement lifestyle — that figure has now risen to 39%.
Scottish Widows blames the growing shortfall on stagnant pension savings that have not kept pace with the rising cost of living. This has left millions in danger of being unable to cover essential expenses once they stop working.
The report identifies several demographics that are particularly vulnerable. These include low- to middle-income earners, younger people under 40, part-time workers, and the self-employed. Moreover, people from LGBTQ+ and black communities, as well as those living with disabilities, are disproportionately affected.
Housing costs remain a key obstacle. With many individuals expected to carry mortgage or rental payments into retirement, the ability to save adequately during working life is being squeezed even further. High housing expenses are increasingly eating into disposable income that could otherwise be set aside for pensions.
The findings also expose stark regional disparities in retirement readiness across the UK. Just 52% of people in both Northern Ireland and the North East of England are on track to meet the minimum standard. In contrast, the East of England leads the way, with 68% expected to be able to afford at least a basic lifestyle in retirement.
The figures were benchmarked against retirement living standards developed by the Pensions and Lifetime Savings Association (PLSA), which define three levels of post-work living: minimum, moderate, and comfortable.
Only 22% of respondents are expected to reach even the minimum standard, allowing for essential needs and a few non-essentials. A mere 8% are projected to afford a moderate lifestyle, while 30% may achieve a comfortable retirement with greater financial freedom.
Pete Glancy, Head of Pensions Policy at Scottish Widows, issued a stark warning: “Our research couldn’t be more timely, spelling out just how crucial targeted measures are in preventing millions from living in retirement poverty in the coming years.”
He continued, “The challenge right now is helping people make the most of what they have. It’s vital that individuals feel financially empowered to make informed decisions and take proactive steps for their future. A strong sense of financial independence plays a key role.”
Scottish Widows is urging policymakers and employers to address these disparities by improving pension access, encouraging savings, and increasing awareness of future financial planning — particularly for at-risk groups.
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With only one in twelve people on course for a moderate standard of retirement living, and fewer still heading for comfort, the report underlines a nationwide challenge. As life expectancy increases and the cost of living continues to climb, bridging the pension savings gap has never been more urgent.
For many, retirement no longer represents a time of well-earned rest and freedom, but rather a looming period of uncertainty. Without significant intervention and a renewed focus on long-term savings, the prospect of enjoying even a modest standard of living in old age is slipping out of reach for millions across the UK.
Proportion of people on track for at least a minimum standard of retirement living, by region:
- Northern Ireland: 52%
- North East: 52%
- South West: 54%
- Wales: 56%
- West Midlands: 58%
- London: 59%
- North West: 59%
- Scotland: 61%
- East Midlands: 64%
- Yorkshire and the Humber: 66%
- South East: 66%
- East of England: 68%
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