Brits’ retirement hopes wane as financial pressures grow
Brits’ retirement dreams are moving further out of reach, as mounting financial pressures leave more people expecting to work for longer in order to live comfortably in their later years.
According to the latest survey from pensions provider Standard Life, most UK adults predict they will now be working until they are 67, rising from 66 in 2024, as rising living costs and growing economic uncertainty makes retirement planning less of a priority.
Just under half of Brits admitted that their retirement finances had fallen out of control, due to focusing on affording short term costs, including rent.
And while more people expect to work later in life, they believe it will not ultimately boost their savings, with over a third of adults expecting their standard of living in retirement to be worse than retirees today.
Catherine Foot, director of the Standard Life centre for the future of retirement, said: “The growing… gap highlights the need for a system that supports flexibility, resilience, and confidence in later life – underpinned by policies, employers and accessible advice that empowers people to achieve the retirement they hope for.”
Auto-enrolment reliance
Despite expecting to work later in life, Gen Z pension savers are refusing to give up on the belief that auto-enrolment saving alone will be enough to fund their retirement, regardless of financial advisers sounding the alarm that more action is needed.
Three in five Gen Z adults believe allocating the minimum required for auto-enrolment will leave them with enough money in later life, highlighting their overconfidence in the default system.
Older generations do not share this view, with only 36 per cent of Gen X relying solely on auto-enrolment, as well as just a quarter of Baby Boomers, who prioritise investing and using capital from property to boost their savings.
Pension providers and other industry figures have urged younger generations to look into modifying their savings methods, as the amount needed for a comfortable retirement moves further out of reach.
According to recent analysis from Rathbones, Gen Z needs a pension pot of approximately £3m to live comfortably.
However, only one in three people with a defined contribution pension reported increasing their contributions beyond the minimum level.
Those who have never accessed financial advice, in particular, were increasingly less likely to modify their pot, reflecting the growing advice gap.
Catherine Foot, director of the Standard Life centre for the future of retirement said: “It’s clear that average rates of saving are too low to give most people a decent income in retirement.”
Pension rumours
Elsewhere, Autumn Budget rumours have led many to believe the pensions system is set to change in the future.
Only 50 per cent of respondents, across all age brackets, believe the state pension will be available for everyone upon reaching the required age to access it.
Meanwhile, one in four believe the triple lock will get the chop, while 23 per cent predicted the 25 per cent tax free lump sum would be scrapped before they reached retirement age.
Foot said: “The fact that people face a growing gap between their retirement hopes and expectations reflects the financial pressures and uncertainties many households face.”