The retirement outlook for Britons has worsened significantly over the past year, with two-fifths of people now off track for even a minimum lifestyle in retirement.
New research from Scottish Widows reveals that 39 per cent of UK residents are not saving enough for their later years, up from 35 per cent in 2023.
Half of people surveyed acknowledge they are not putting enough aside for retirement. The findings come amid a cost of living crisis that continues to squeeze household budgets and hamper long-term financial planning.
Despite pension saving levels increasing in the past year, they have failed to keep pace with rising living costs.
Projected retirement income has risen to £17,200 from £15,500, according to Scottish Widows' research.
Britons are at risk of falling into "retirement poverty"
GETTYThe report found that 42 per cent of people in their 20s are at risk of poverty in retirement, while 23 per cent will only manage a minimum retirement lifestyle.
Competing financial priorities make retirement saving difficult for this age group. A quarter of people in their 20s prioritise saving for emergency expenses, while 13 per cent are not able to save at all.
Emergency funds, house deposits and holidays rank as their main savings goals instead of pension contributions. This creates a concerning outlook for younger generations' financial security in later life.
Low-to-middle earners face equally concerning prospects, with those earning between £20,000 and £35,000 in their 30s most likely to contribute only the minimum eight per cent under auto-enrolment.
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Chancellor Rachel Reeves is being urged to consider pension reforms to bolster retirement savings
GETTYThis group faces a dramatic 60 per cent income drop in retirement on average, with 70 per cent seeing their income halved.
Self-employed workers are in an even more precarious position as they're excluded from auto-enrolment.
More than half (51 per cent) of self-employed individuals risk being unable to cover basic needs in retirement. Just 25 per cent are on track for even a minimum retirement lifestyle.
Nearly two in five (39 per cent) self-employed workers acknowledge they aren't saving enough, with 23 per cent not saving anything at all.
Alongside this data, Scottish Widows stresses the need for financial empowerment to address these retirement challenges.
While 69 per cent of people feel financially independent, a quarter do not and 44 per cent believe they'll never achieve this.
Pete Glancy, Scottish Widows head of pensions policy, said: "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."
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Britons are worried about the future of their retirement
GETTYHe identified three key areas requiring urgent attention: "auto-enrolment, self-employed contribution rates and housing, considering both home ownership and affordable housing."
The Government's pension review must take "a holistic view on people's financial journey through life," Glancy added.
Brian Byrnes, head of personal finance at Moneybox, described the findings as painting a "stark picture" of the UK's worsening retirement outlook.
"With 1.6 million more people now at risk of retirement poverty compared to last year, the urgency for action has never been clearer - especially for groups like Gen Z, low to middle earners, and the self-employed," she said.
