Scottish Widows has issued an urgent retirement warning to 34 million UK adults, cautioning that 62% of the population could face a major life event or financial challenge that seriously affects their retirement savings.
The report, which focuses on the impacts of vulnerability, said these experiences ranged from ill health, divorce and bereavement, to lower financial resilience and confidence managing money. The insurer said this often results in a reduced focus on retirement savings.
Building resilience during good times
Jill Henderson, retirement expert at Scottish Widows, acknowledged there is "no easy fix", but encouraged people to build resilience when things are "going well".
She said: "Financial vulnerability is something many people face at different points in their life for a variety of reasons. Whatever form it takes, the reality is that most of us will be affected by financial vulnerability at some point in our lives, even for a short period.
"This can have a permanent impact on people’s long-term financial plans, as the demands of living today may affect saving for tomorrow. When income drops - for example because someone may be unable to work for health reasons - savings can start to dwindle, debt can build, and longer-term financial plans may take a backseat.
"It’s true that there’s no easy fix to this – but helping people build resilience while things are going well, and supporting them properly when circumstances change – is an important place to start."
Report findings and planning tools
The report, based on YouGov data from 5,120 adults, found that more than half (54%) of people with vulnerable characteristics reported increased financial stress when setting money aside for retirement, compared with 29% of non-vulnerable adults.
Scottish Widows encouraged people to plan for their retirement. Tools such as a retirement calculator can help people understand the long-term financial impact of decisions during their working lives, such as taking a career break.
It can work out what retirement income they are on track for, suggest ways to boost pension savings, and understand how other activities, such as investing, can help them build wealth alongside it.
