One in three UK workers at risk of retirement poverty, new report warns 

Fifteen million people in the UK risk falling into poverty in retirement, according to the latest Retirement Report from Scottish Widows, which warns that the nation’s long-term financial outlook has worsened sharply over the past year. 

The report finds that 39 per cent of adults are not on track for even a minimum standard of living in retirement, up from 35 per cent in 2023, despite slightly higher savings levels. Average projected retirement income has risen from £15,500 to £17,200, but this has failed to keep pace with inflation and living costs. 

The findings point to deep and widening inequalities across age and income groups. Generation Z workers face growing barriers to saving as competing priorities, from rent and bills to house deposits, limit what they can put aside for later life. The research estimates that 42 per cent of those in their 20s are likely to fall below the poverty threshold in retirement, with almost a quarter only able to afford the most basic lifestyle. 

Low- and middle-income earners are also struggling. Those earning between £20,000 and £35,000 a year are most likely to save the minimum 8 per cent under auto-enrolment, leaving many exposed to an average 60 per cent income drop when they stop working. Around 60 per cent of workers in their 30s admit they aren’t saving enough, and nearly a third say they save nothing at all. 

The picture is equally concerning for the UK’s self-employed, a group still excluded from automatic workplace pension enrolment. More than half (51 per cent) are at risk of being unable to cover basic needs in retirement, and only one in four are on track for even a minimum lifestyle. 

Scottish Widows says the government’s next phase of pensions reform must take a broader view of people’s “financial journey through life”, covering auto-enrolment, self-employed contributions and housing affordability. 

Pete Glancy, Head of Pensions Policy at Scottish Widows, said: 

“Our research couldn’t be timelier, spelling out just how crucial targeted measures are in preventing millions from living in retirement poverty in the coming years. For now, the challenge is helping people make the most of what they have. It’s essential that 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.” 

The study also highlights that while 69% of people feel financially independent, a quarter still do not, and two in five say they may never achieve that confidence. Scottish Widows argues that helping people build financial independence is fundamental to addressing the UK’s deepening retirement gap. 

Conducted by YouGov in early 2025, the research surveyed more than 5,000 UK adults, including additional analysis of minority ethnic groups.