Millions of Britons in line for ‘miserable’ retirement
Two in five pension savers face a “miserable” retirement as rising living costs outstrip incomes in old age, a report has found.
Around 14 million working age people risk not having enough money to cover their basic needs when they retire, according to research from Scottish Widows.
Some 38pc of 16-to-64 year olds are forecast to fall short, up from 35pc in last year’s survey. This equates to an extra 1.1 million people.
It also found that only 32pc of working age people were on track to achieve a “comfortable” lifestyle, down from 36pc in 2023.
Those on course to achieve a “moderate” standard of living fell from 11pc to 7pc, while those forecast to earn only enough to live a dignified retirement, or “minimum” lifestyle, rose from 18pc to 23pc.
The rise has been driven by increases in living costs, such as surging rents, coupled with inadequate pension contributions, the report said.
Scottish Widows based its analysis on the retirement living standards produced by the Pensions and Lifetime Savings Association (PLSA).
The minimum standard is defined as having enough income in retirement to cover basic needs, with some left over for non-essential spending – equivalent to £14,400 post-tax income for a single person or £22,400 for a couple.
This includes being able to afford a one-week UK holiday and having £50 to spend a week on groceries or £95 as a couple.
The minimum standard assumes that someone would not have a car.
The bleakest outlook was for the cohort aged 22 to 29, 47pc of whom were on course to miss the minimum standard by the time they hit retirement age.
The report also found that 48pc of people in the LGBTQ+ community risked falling short of a minimum standard, compared to a population average of 38pc.
Stephanie Fuller, of LQBTQ+ charity Switchboard, said family estrangement and trans people spending money on gender affirming care were behind the disparity.
Caroline Abrahams, of charity Age UK, said hundreds of thousands of older people were already living “miserable lives behind closed doors” and struggling to get by.
She added: “Rising living costs have hit everyone but we know that older people living on a fixed low income have found life especially hard.
“At Age UK we’ve heard very worrying stories of those affected cutting back on all kinds of things, including care and support to help them to stay independent, groceries and energy, and foregoing the little treats that made life worth living.”
The research was based on the personal financial details submitted to YouGov by more than 5,000 people across Britain in March and April.
It comes after business leaders close to Labour said they hoped the party’s wide-ranging pension review would include a commitment to raising the minimum contribution levels for workplace pension schemes.
Currently, auto-enrollment rules mean that eligible workers are automatically enrolled into workplace schemes, with employees and employers paying in at least 8pc. This level has long been deemed by experts as too low for an adequate retirement.
Paul Leandro, of consultancy Barnett Waddingham, said: “This research paints a worrying picture for future retirees, and is a stark reminder that we’re yet to defuse the ‘ticking time bomb’ that is the UK’s pension system.”
A Department for Work & Pensions spokesman said: “Ensuring a better deal for pensioners of today and tomorrow is a priority for this government, that is why we have set out ambitious plans which could boost pension pots by over £11,000.
“Our Pensions Review will consider further steps to improve pension outcomes and increase investment in UK markets, including assessing retirement adequacy.”