3 in 4 People Are NOT Ready To Retire – Here’s Why (and What You Can Do About It)
Research from deVere Group found that 74% of Britons are not on track to retire with enough money to maintain their current lifestyle, indicating a potential "looming retirement crisis" due to insufficient savings and a lack of awareness about future needs.
Retirement meant to be a time of relaxation, pursuing hobbies and enjoying the fruits of a lifetime's labour. Yet, for a vast majority of people in the UK, the financial reality looks starkly different. Shocking statistics suggest that as many as three in four working-age adults may not be saving enough to achieve even a moderate standard of living in retirement, let alone a comfortable one.
This isn't just a number; it represents millions facing potential hardship or the prospect of working far longer than they planned. At Plouta, we believe understanding the root causes of this challenge is the first step towards changing the outcome. This guide will explore the key reasons why so many Britons are unprepared for retirement and offer clear, actionable steps you can take now to secure your own financial future.
What You’ll Learn in This Guide:
The Reality Check: Understanding the scale of the retirement savings gap in the UK.
Reason 1: We're Not Saving Enough: The impact of auto-enrolment minimums and the cost of living.
Reason 2: We Don't Know How Much We Need: The gap between expectations and reality.
Reason 3: The Decline of "Gold-Plated" Pensions: Why the burden has shifted to individuals.
Reason 4: Gaps in the System: Issues affecting women, the self-employed, and State Pension entitlement.
Taking Control: Practical steps to improve your retirement readiness today.
The Reality Check: A Nation Undersaving for its Future
The "3 in 4" statistic isn't an exaggeration. Multiple studies paint a consistent picture of widespread under-saving:
Pension Pot Sizes: Data often reveals that median defined contribution pension pot sizes for those approaching retirement are alarmingly low. For example, recent figures might show those aged 55-64 having median pots far below what's needed to generate a moderate income, potentially under £50,000 for many.
Falling Short of Living Standards: Organisations like the Pensions and Lifetime Savings Association (PLSA) set Retirement Living Standards. Many reports estimate that over half of defined contribution savers are on track to fall below even a "moderate" income level in retirement (£31,700/year for a single person in 2025).
Confidence Crisis: Reflecting this reality, surveys consistently show low confidence levels, with fewer than half of UK adults feeling confident they are saving enough for retirement.
So, why is this happening?
Reason 1: We're Simply Not Saving Enough (Even with Auto-Enrolment)
Automatic enrolment has been a huge success in getting millions more people saving into a workplace pension. However, the minimum contribution level (currently 8% total, with only 5% coming from the individual including tax relief) is widely regarded as insufficient for achieving a comfortable retirement.
The Minimum Trap: Many people stick to the minimum contribution, assuming it's the "recommended" or "sufficient" amount. It's not; it's just the legal floor.
The Cost of Living Squeeze: Recent years of high inflation have forced many households to cut back or pause pension contributions just to cover essential bills, further exacerbating the problem.
Delayed Start: Many people don't start seriously saving until their 30s or even 40s, missing out on crucial decades of compound growth.
The Fix: Aim higher than the minimum. Use the "half your age" rule as a guide (save a percentage equal to half the age you started saving). Even increasing your contribution by 1-2% can make a huge difference over time.
Reason 2: We Underestimate How Much We Actually Need
Many people have a vague idea of wanting a "comfortable" retirement but have never put a real number on it.
The Expectation Gap: We underestimate how long we might live in retirement (potentially 20-30+ years) and the impact of inflation on eroding our savings' purchasing power.
Lack of Planning: Without a clear target pot size or desired annual income, it's impossible to know if your current savings rate is adequate.
Ignoring the Details: People often forget to factor in costs like replacing cars, home maintenance, or potential future care costs into their retirement budget.
The Fix: Get specific. Use the PLSA Retirement Living Standards as a starting point to define your desired income. Then, use a pension calculator (like Plouta's) to estimate the pot size needed to generate that income. Knowing your target number transforms saving from a chore into a focused mission.
Reason 3: The Disappearance of Defined Benefit Pensions
Previous generations often benefited from generous "Defined Benefit" (DB) or "final salary" pensions, which guaranteed a specific, inflation-linked income for life. These have largely vanished from the private sector.
The Shift in Risk: Today, most people have Defined Contribution (DC) pensions. The responsibility and risk have shifted entirely from the employer to the individual. Your final income depends solely on how much you save and how well your investments perform.
Less Security: DC pensions do not provide the same income certainty as DB schemes, making planning more complex and requiring individuals to build larger pots to achieve the same level of security.
The Fix: Recognise that you are the sole architect of your DC pension outcome. Engage with your investments, understand the charges, and save diligently.
Reason 4: Gaps in the System – Vulnerable Groups
While under-saving is widespread, certain groups face particular challenges:
The Gender Pension Gap: Women typically retire with significantly smaller pension pots than men. This is due to factors like the gender pay gap, career breaks for childcare or eldercare (leading to missed contributions), and higher likelihood of part-time work.
The Self-Employed: Without an employer to auto-enrol them, self-employed individuals must proactively set up their own pensions (like a SIPP). Many fail to do so or contribute irregularly, leaving them highly vulnerable.
State Pension Gaps: Many people assume they will automatically receive the full State Pension. However, gaps in your National Insurance record (due to time out of work, low earnings, or periods abroad) can reduce your entitlement.
The Fix: Check your specific situation. Women should explore options like spousal contributions during career breaks. The self-employed must prioritise setting up a SIPP or Personal Pension. Everyone should get their State Pension forecast online and check for gaps.
Taking Control: Your Action Plan for Retirement Readiness
Feeling unprepared can be stressful, but it's never too late to take positive action. Here's what you can do now:
Get Your Numbers: Find all your pension pots and get your State Pension forecast. Use a pension calculator to see your projected income.
Increase Contributions: Even a small increase makes a difference. Aim to exceed the auto-enrolment minimums, especially if your employer offers contribution matching.
Check Your Investments: Ensure your pension isn't sitting in an overly cautious fund if you still have many years until retirement. A diversified global equity fund is often suitable for long-term growth.
Minimise Fees: Check the charges on your pensions. Consolidating older, high-fee pots into a modern, low-cost SIPP can save you thousands.
Seek Guidance: Use free resources like MoneyHelper and Pension Wise. If you have significant savings or complex needs, consider paying for regulated financial advice.
Conclusion: It's Not Too Late to Change Your Story
The statistic that 3 in 4 people are not ready for retirement is a stark warning, but it doesn't have to be your personal reality. The UK pension system, with its tax reliefs and employer contributions, provides powerful tools to build a secure future.
The key is to move from passive saving to active planning. By understanding where you stand, setting clear goals and taking consistent action starting today you can rewrite your retirement story and build the financial independence you deserve.
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Disclaimer: This article provides general information about UK retirement savings and is for informational and educational purposes only. It does not constitute financial advice. The value of investments can go down as well as up. Tax and pension laws are complex and subject to change. Always seek professional, regulated financial advice tailored to your specific circumstances.