Scottish Widows’ new data shows a concerning 39% of people are on track for a less than minimum lifestyle in retirement – and this outlook has worsened since 2023
A new report has unveiled the alarming number of people who may struggle to meet their basic needs upon retirement. The latest figures from Scottish Widows reveal that a concerning 39% of people are heading towards a lifestyle below the minimum standard in their retirement years.
This situation has deteriorated since 2023, when 35% of respondents expressed concerns about affording essential expenses in retirement. The recent study also indicates that 27% of people worry they will have to prolong their working life beyond their preference, with 15% fearing they may never be able to retire.
The research used the retirement living standards established by the Pensions and Lifetime Savings Association (PLSA), adjusting the thresholds in accordance with inflation. This means that for a minimum retirement standard, an individual should have an annual income of £14,800, while a couple should have £23,100.
According to the PLSA, this amount “covers all your needs, with some left over for fun and social occasions”, but it wouldn’t suffice for overseas holidays. For a comfortable retirement, you’d need an annual income of £44,400 if you’re single, or £60,800 for couples.
Such an income would enable you to “be more spontaneous with your money” and indulge in more of your favourite activities. Only 22% of people believe they will achieve a minimum lifestyle in retirement, compared to 8% who anticipate a moderate lifestyle, and 30% who expect to enjoy a comfortable lifestyle, reports the Mirror.
The latest findings from Scottish Widows underline a pressing concern for the financial future of low to middle-income workers and individuals under 40, suggesting they’re disproportionately at risk of missing out on a basic retirement lifestyle.
As many as one in four individuals do not consider themselves financially independent. This unease is particularly prevalent among young adults, people living with disabilities, renters, and those earning lower incomes.
The obstacles in reaching financial independence appear to be insufficient emergency savings, lack of retirement funds, and constrained capacity for saving more. People are prioritising better earnings, home ownership, and clearing their debts above all else.
According to the research, those in part-time or self-employed roles may confront poorer prospects for retirement than those in full-time employment.
Additionally, a dramatic variation in retirement outlooks was observed throughout the regions of the UK.
While Northern Ireland and the North East of England saw just over half (52%) of residents on course for at least a minimum standard of retirement, this rose to over two-thirds (68%) in the East of England.
Scottish Widows partnered with Frontier Economics and conducted a YouGov survey of upwards of 5,100 UK participants in January and February to gather these insights.
Pete Glancy, head of pensions policy at Scottish Widows, emphasises the significance of the study: “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 went on to say: “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.”
All those on track for minimum retirement
- London – 59%
- Scotland – 61%
- West Midlands – 58%
- Northern Ireland – 52%
- East Midlands – 64%
- North East – 52%
- Wales – 56%
- North West – 59%
- Yorkshire and the Humber – 66%
- South East – 66%
- East of England – 68%
- South West – 54%
