Three in five (62%) people, equating to more than 34 million adults across the UK, will face a major life event or financial challenge which could seriously impact their retirement savings, according to Scottish Widows.
These experiences, ranging from ill health, divorce and bereavements through to lower financial resilience and confidence managing money, often result in a reduced focus on retirement saving.
More than half (54%) of people with vulnerable characteristics say putting money aside for retirement increases their financial stress, compared with 29% of other adults.
Additionally, nearly twice as many vulnerable people facing life or financial challenges are overwhelmed when thinking about retirement savings.
Jill Henderson, retirement expert at Scottish Widows, 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.”
Scottish Widows said anxiety creates a barrier to planning ahead, with 63% of people opting to do little-to-no research into retirement and 28% failing to make any arrangements. A further 28% haven’t started saving into a pension yet, while 13% have stopped or reduced their retirement savings in the past year.
As a result of this, 60% of adults don’t feel confident managing their retirement savings. Two-thirds (66%) worry that they will run out of money in retirement, and 38% within this group are part of an ethnic minority.
“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,” Henderson added.
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