UK faces growing retirement crisis as 1.2m more fall below minimum lifestyle standard

According to a report, nearly one million more individuals could be at risk of not maintaining a minimum standard of living in retirement, compared to last year's data. The research by Scottish Widows highlights that 38 percent of the population is potentially off-course in achieving even a basic lifestyle post-retirement, marking a significant increase from the previous year's figure of 35 percent.

This uptick equates to about 1.2 million extra people. The findings were drawn from the annual report using the Pensions and Lifetime Savings Association's (PLSA) retirement living standards as a benchmark.

As per this standard, the minimum lifestyle is defined by possessing sufficient pension income to meet all essential needs while having spare funds for enjoyment such as affording a one-week UK holiday or being able to spend £50 on weekly groceries or £95 as a couple. The absence of any car-related costs is also considered under these standards.

A surge in living expenses including an increased cost of rents has been identified as the primary driver behind the growing numbers of people falling short of the required retirement standard. As the report puts it, "More people will be renting or carrying mortgage repayments on through retirement in the future."

The research was conducted via a YouGov survey incorporating responses from more than 5,000 UK residents during March and April.

It discovered that over half (54 percent) of retirees anticipate working for an additional seven years due to financial challenges. Most people expressed their wish to retire at an average age of 62.

Scottish Widows' 20th annual retirement report has revealed that younger generations aspire to retire even earlier. Typically, those aged between 18 and 29 wish to retire at 61, but would be willing to work until an average age of 64 if necessary a decision that still leaves a gap before they reach the state pension age.

Across all age groups, over a quarter (27 percent) of those who have made retirement plans do not believe they will ever be able to afford it. Scottish Widows has proposed a roadmap to increase minimum contributions into pensions from eight percent to 12 percent, "with a strong steer that those who can afford 15 percent should do so".

Pete Glancy, head of pensions policy at Scottish Widows, expressed his concern: "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."

He warned: "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."

He further added: "At present only the wealthiest tend to rely on professional support from a qualified financial adviser."

He concluded by saying: "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."