Report highlights growing gap regarding retirement expectations

The percentage of people not on track for even a minimum retirement lifestyle has worsened, from 35% to 38% since 2023, according to a new report from Scottish Widows, which finds most people would like retire at the age of 62, but 54% think they will have to work longer than they would like, on average by seven years.

Scottish Widows’ 20th annual Retirement Report notes that the increase in those projected to suffer the poorest retirement outcomes has been driven by rises in the cost of living relative to the growth in wages.

It also shows that over a quarter (27%) of those who have made retirement plans don’t feel that they would ever be able to afford to do it, but that younger people would like to retire even earlier, with those aged 18-29 wanting to retire at 61 and only prepared to work until they reach 64 if necessary – four years short of the age at which they will be able to access their State Pension.

Survey respondents also emphasised people’s reliance on the State Pension. Just over half (54%) expect the State Pension to eventually form a meaningful portion of their retirement income, with three quarters (75%) calling it hugely important in helping them pay for everyday necessities. However, 12% of people are not convinced this level of help will be available to them by the time they retire.

Pete Glancy, Head of Pensions Policy at Scottish Widows, said: “The growing gap in retirement outcomes and people’s quality of later life, between those who are currently retired and those who will retire in the future, is of great concern.

“However, people are starting to think about how their private pension pot might interact with their State Pension Entitlement to plan their retirement. But, there is still a real reliance on the  State Pension, and while some will be able to use their private pension pot to give them the flexibility they are looking for in terms of retirement age, it’s only starting to dawn on others that they may end up working for much longer.”

He added: “It is likely to be a long time before Britain has been saving enough to give future pensioners the outcomes they hope for. In the meantime, helping people to make the very most of what they have is going to be critical. It’s the right moment for the new government to take a holistic view on people’s financial resilience throughout life, paying particular attention to those whose retirement outcomes are predicted to be much lower.

“At present only the wealthiest tend to rely on professional support from a qualified financial adviser. As an industry, we need to find a way to give people better support in making good financial decisions at a price more savers are willing and able to pay.”

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