The number of people facing a difficult retirement has increased again, new research has shown.
Rising living costs and slow savings growth are leaving many at risk of falling short.
New findings from Scottish Widows reveal that almost two in five people in the UK are not on track to afford a basic standard of living in retirement.
The figure has worsened since 2023, rising from 35 per cent to 39 per cent. That increase means around 1.6 million more people are now at risk of falling below the minimum living standard.
The research found that while average pension savings have increased slightly, they have not kept pace with the cost of living. Projected retirement income has risen to £17,200 from £15,500.
However, the Pension and Lifetime Savings Association estimates that a single person outside London now needs £14,800, and this figure does not include housing costs.
Pausing pension contributions even for a short time can have consequencesGETTYScottish Widows said the outlook is especially worrying for people under 40, low to middle earners and self-employed workers.
Part-time workers are also more likely to face poorer retirement outcomes than full-time employees.
The report found deeper inequalities among some groups. People who identify as LGBTQ+, disabled people and people from black communities are among those most likely to fall short of a basic lifestyle in retirement.
High housing costs are another major barrier. Some people will still be paying mortgages or rent during retirement, while others are struggling to save now due to monthly housing expenses.
There are also large regional differences. The proportion of people expected to reach at least the minimum living standard ranges from just 52 per cent in Northern Ireland and the North East to 68 per cent in the East of England.
Poverty threat grows as millions 'not on track to afford even basic needs' in retirement
GETTYScottish Widows worked with Frontier Economics and used a YouGov survey of more than five thousand people across the UK earlier this year.
The research is based on retirement living standards set by the Pensions and Lifetime Savings Association. These standards define three lifestyles in retirement: minimum, moderate and comfortable.
The report indicated that just over a fifth, or 22 per cent, of people across the UK may end up with a minimum lifestyle in retirement.
This would mean having enough money to cover basic needs, with a small amount left over for non-essentials.
Only one in 12 (eight per cent) are on track for a moderate lifestyle, which offers more financial security and flexibility.
Around three in 10 (30 per cent) are expected to reach a comfortable retirement lifestyle, allowing for greater financial freedom and luxuries.
Pensioners face a 'poorer retirement' following a Government decision GETTY Pete Glancy, head of pensions policy at Scottish Widows, 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.”
He added: "For now, the challenge is helping people make the most of what they have.
"It is essential to ensure people feel financially empowered to make informed decisions and take proactive steps for their future – with a strong sense of financial independence playing a key role."
