15.3 million people today are at risk of retirement poverty – Retirement report

7 May 2025

• Retirement outlook worsens since 2023 with 1.6 million more people risking retirement poverty
• Scottish Widows’ annual Retirement Report spotlights the people facing serious retirement challenges – with major concerns for Gen Z, low to middle-income earners and self-employed workers
• Building financial empowerment is crucial, yet a quarter still don’t feel financially independent

Rising living costs have worsened the nation's retirement outlook since 2023. Two fifths (39%) of people in the UK aren’t on track for a minimum lifestyle in retirement, worsening from 35% in 2023.

Although pension saving levels have increased in the last 12 months, with projected retirement income rising to £17.2k from £15.5k, they have failed to keep pace with the cost of living, according to Scottish Widows’ latest Retirement Report.

The Pension and Lifetime Savings Association (PLSA) estimates that a minimum retirement lifestyle would cost a single person outside London £14.8k per year in today’s money – excluding housing costs* - leaving retirees with minimal funds after basic living costs.

Across the population, as many as half (50%) know they aren’t saving enough for retirement, with certain key groups facing even worse outcomes.

‘Generation Z’: those in their 20s

Most young adults will be saving into a Defined Contribution pension through their employer, as well as relying on personal savings and the State Pension. However, competing financial goals makes retirement savings a challenge. A quarter (25%) of people in their 20s prioritise saving for emergency expenses, while 13% aren’t able to save at all. Instead, their main savings goals are emergency funds, house deposits and holidays.

Under the National Retirement Forecast (NRF) projections**42% of young people in their 20s are at risk of poverty in retirement and 23% will only be able to afford a minimum retirement lifestyle.

Squeezed low to middle earners

Auto-enrolment has resulted in millions of people saving for the future, but the default contribution rate leaves minimum savers vulnerable. Squeezed low to middle earners, those on an income between £20,000 and £35,000 and in their 30s, are mostly likely (46%) to contribute the minimum 8%.

This group faces a 60% income drop in retirement on average, with 70% seeing their income halved. Amid financial pressures, 60% of people in their 30s know they aren't saving enough, and 30% don’t save.

Self-employed

The UK’s 4.39 million self-employed workers*** are still excluded from automatic enrolment, leaving many with poor retirement outcomes. Over half (51%) are at risk of not being able to cover their basic needs in retirement and just 25% are on track for a minimum retirement lifestyle. Two in five (39%) self-employed workers believe they aren’t saving enough for retirement, with 23% not saving anything at all.

Building financial empowerment is crucial for addressing retirement challenges

Becoming financially empowered and independent enables people to take control of their finances and plan effectively for retirement. While 69% of people feel financially independent, a quarter do not. And, over two in five (44%) don’t believe they will ever be able to achieve this.

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.

“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.”

Download full press release (PDF, 240KB)

Notes

Methodology

The research was conducted online by YouGov across a total 5,167 nationally representative adults aged 18+ in the UK between 22/01/2025 – 11/02/2025. This included a boost of 445 adults aged 18+ to better understand the retirement prospects of minority ethnic groups, also weighted to be representative of the UK minority ethnic population aged 18+.

*PLSA Retirement Living Standard: We use the retirement living costs published by the PLSA. These vary between singles and couples, and also people living in and outside London. The thresholds are updated in line with CPI inflation from the data published by the PLSA to the effective date of this report. We have increased the thresholds from 2024 in line with inflation to reflect the rising cost of living – as shown in the table below.

**First run in 2023 with the help of Frontier Economics, the NRF assesses the potential retirement outcomes for those aged 22 to 65. It is a projection based on the current savings and behaviours of individuals and takes a comprehensive view of sources of retirement income, including the State Pension, private pensions, other long-term savings, and inheritance.

The NRF compares the retirement income people are on track for to the costs they could face living expenses for different retirement living standards defined by the Pension and Lifetime Savings Association (PLSA) and housing costs for those who expect to rent or continue to pay off a mortgage in retirement.

***UK labour market statistics (PDF, 410KB)

About Scottish Widows

Founded in 1815, Scottish Widows is part of Lloyds Banking Group, the UK’s largest digital bank and financial services group. With more than £226bn assets under administration and 10 million customers, Scottish Widows’ award‐winning product range includes workplace and individual pensions, annuities, life cover, critical illness and

income protection, as well as savings and investment products. More than 2 million customers access Scottish Widows products and services through the Lloyds Bank and Scottish Widows apps, in addition to accessing directly through independent financial advisers. The Scottish Widows Platform is trusted by more than 18,000 advisers and 5,400 advice firms, that manage the pensions and investments of almost 166,000 clients.