More than 15 million people in the UK are now at risk of poverty in retirement as rising living costs continue to outpace pension savings, according to Scottish Widows’ latest Retirement Report.
The report reveals that 39% of UK adults are not on track to afford even a minimum retirement lifestyle, up from 35% in 2023.
While projected average retirement income has increased from £15,500 to £17,200 over the past year, inflation and rising living costs have eroded progress.
Scottish Widows highlights three particularly vulnerable groups:
- Generation Z (in their 20s): 42% are set to retire in poverty, with many prioritising short-term financial needs such as emergency funds and housing deposits over long-term savings.
- Low to middle earners (aged 30s, earning £20,000–£35,000): 70% are projected to lose half their income in retirement. Despite this, nearly a third aren’t saving, and 60% say they know they’re not saving enough.
- Self-employed workers: Largely excluded from automatic enrolment, over half (51%) are at risk of not covering basic retirement needs. One in four aren’t saving anything at all.
While 69% of people feel financially independent today, nearly half (44%) don’t believe they’ll ever achieve it.
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.
“The second phase of the Government’s Pensions Review must be broad enough to take a holistic view on people’s financial journey through life considering wide-ranging financial goals. There are three key areas that must be addressed urgently: auto-enrolment, self-employed contribution rates and housing, considering both home ownership and affordable housing.”
