- 39% of people may not afford even a basic lifestyle in retirement, Scottish Widows reports.
- Low- to middle-income earners and self-employed workers are particularly vulnerable.
- Housing costs and stagnant pension savings worsen retirement prospects.
Rising living costs and insufficient pension savings have put nearly two in five people at risk of being unable to afford even a basic lifestyle in retirement, according to Scottish Widows.
High housing costs compound the problem, as some retirees may still be paying mortgages or rent, making it difficult to save adequately during their working years.
Retirement Crisis Looms for 39% as Living Costs Outpace Pension Savings
Scottish Widows’ latest report underscores a growing retirement crisis, with 39% of people projected to lack sufficient savings to cover even basic living expenses in their later years. This marks a worrying increase from 35% in 2023, signaling a deteriorating outlook for retirement security across the UK.
Low- to middle-income earners are particularly vulnerable, with the report highlighting that part-time and self-employed workers face greater risks of inadequate retirement savings. Additionally, people from marginalized groups, including those identifying as LGBTQ+, people with disabilities, and black communities, are disproportionately affected.
Housing costs have emerged as a significant barrier to securing a minimum retirement income. With rent and mortgage payments extending into retirement, many are finding it increasingly difficult to allocate enough money for their pensions. The struggle to keep up with rising living expenses exacerbates this issue, particularly for younger workers under 40.
Scottish Widows collaborated with Frontier Economics and YouGov, utilizing PLSA’s retirement living standards to assess retirement prospects. The findings reveal stark regional disparities, emphasizing that some areas in the UK face even higher risks of inadequate retirement savings.
Addressing the retirement savings gap requires targeted strategies that consider the unique challenges faced by vulnerable groups, including housing affordability and employment stability.
“The biggest risk to retirement security is not just how much you save but how much you keep up with the rising cost of living.
