Even the best-laid retirement plans can be knocked off course by events. These five shock events could turn them upside down. When planning for the future, it's important to be aware of the dangers, to make sure you're setting aside enough.
Maike Currie, VP personal finance at PensionBee, has highlighted three major threats that could leave people short in retirement. "While very different, each can interrupt earnings, reduce pension contributions or delay long-term saving entirely, making it harder for people to build the retirement savings they need," she said.
Funding the Bank of Mum and Dad
Some 3.6 million adults aged 20 to 34 lived with their parents in 2024, as high housing costs make it harder to stand alone. Many more rely on parents for rent, deposits or everyday bills. Currie said planning can be harder if you have to fund grown-up children when you should be prioritising your own retirement. Tip: Help your children if you can, but don't sacrifice your own pension saving to do it.
Divorce Can Ravage Pensions
Pensions can be one of the most valuable assets in a marriage, yet they're often overlooked when couples separate. More than a third of divorcees didn't know the value of their own pension when they separated, according to research cited by the Pensions Policy Institute. "Giving up pension wealth without understanding its long-term value can have consequences that last a lifetime," Currie said. Tip: Make sure every pension is valued and considered as part of the financial settlement.
Caring Responsibilities
Looking after children or ageing parents can interrupt careers, reduce earnings and weaken pension saving. Women are particularly exposed to this risk, Currie said. "Caring is one of the biggest hidden risks." Tip: Carers should check if they qualify for National Insurance credits and keep saving in a pension where possible.
Unexpected Illness or Disability
A serious illness or disability can force people to cut their working hours or leave work altogether, often years earlier than planned. This could slash earnings and pension contributions just when they're most valuable. It may also increase household costs, making it harder to keep tucking money away. Tip: Check what sick pay and income protection you'd receive through work, and consider whether you have enough insurance and emergency savings to cope with a prolonged break. Consider taking out critical illness cover or income protection cover, typically sold through insurance brokers.
Stock Market Crash
Global stock markets have been booming in recent years, but investors are starting to get nervous. They think that the surge in US technology stocks may have gone too far, while the artificial intelligence (AI) bubble may be ready to burst. Investors are also worried about war in Iran, which threatens to send the oil price and inflation even higher. Others are concerned about the sheer scale of debts that governments, including ours, have now racked up. This doesn't mean you should sell all your shares, but caution is required. Tip: Make sure you have a year or two readily available cash to cover short-term spending. That way you won't need to sell shares at the bottom of the market, and can wait for the recovery. Equities typically bounce back, but need time.
