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More than 15 million are on course for a retirement marked by financial hardship, a major pensions provider has warned.
A report by Scottish Widows reveals a worrying rise in the number of people who are not saving enough to afford even the most basic standard of living in later life.
It found that some 39% of UK adults are now off track for retirement, up sharply from 35% just a year ago.
The average projected income for retirees has gone up in the past year from £15,500 to £17,200. But this increase, experts warn, is being wiped out by high inflation and the ongoing cost-of-living crisis.
Three particularly vulnerable groups:
* Young adults in their 20s (Generation Z): 42% are heading toward poverty in retirement, with many prioritising day-to-day survival and short-term goals like saving for a house deposit over pensions.
* Low to middle earners in their 30s, making £20,000 to £35,000: A staggering 70% face the prospect of losing half their income in retirement. Despite the looming crisis, almost one in three aren’t saving at all, and 60% admit they are not putting enough away.
* The self-employed, who are not covered by automatic pension enrolment: More than half (51 per cent) are at risk of not meeting even minimum retirement needs, with one in four not saving anything.
Despite these alarming findings, many remain unaware of the scale of the threat. While seven in ten (69% people feel financially independent today, almost half (44%) say they doubt they ever will be.
The findings add pressure on the Government to speed up reforms to the pensions system. There are calls to widen auto-enrolment into workplace pension schemes and boost minimum contributions, plus improve access for the self-employed.
Campaigners are also urging ministers to take into account the impact of sky-high rents and falling home ownership, which leave many without assets to fall back on in old age.
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.”
