Millions of workers whose lives are overshadowed by physical or mental health conditions are facing a retirement income crisis, with half at risk of pension poverty, a major new report has warned. An estimated 50% of adults whose health conditions affect their day-to-day lives are heading towards pension poverty in retirement – nearly double the 27% rate for the general population.
The research from Scottish Widows comes amid mounting concern that soaring levels of long-term illness are forcing people out of work, slashing earnings and leaving them with significantly smaller pension pots. Under the latest retirement projections, pension poverty refers to having an income below the minimum threshold required to achieve the retirement lifestyle standards outlined by the Pensions UK Retirement Living Standards.
While 60% of UK adults believe they will be fit enough to carry on working until their planned retirement age, almost three in 10 (29%) say their physical or mental health has hampered their ability to work during the past five years. For many, the consequences have been devastating: one in 10 (10%) said they had stopped working entirely due to health issues, while 7% had cut their hours and 6% had moved into less demanding or lower-paid roles.
Fresh research published this week by the Pensions and Lifetime Savings Association revealed that a single pensioner now requires around £13,400 a year to achieve a minimum standard of living in retirement, climbing to £31,700 for a moderate lifestyle and £43,900 for a comfortable retirement. Against this backdrop, many people with health conditions face an increasing risk of falling short.
The study also uncovered widespread concern over the potential cost of care in later life. More than a third (34%) of adults have yet to consider how they would fund care if they needed it, while 51% are not confident they could afford it. Among those living with a physical or mental health condition, anxiety runs even higher, with 67% lacking confidence in their ability to meet future care costs.
Susan Hope, a pension expert at Scottish Widows, said: 'Navigating health challenges is something which many of us will have to face in our later years. Whether it's managing a chronic condition, mental burnout, or working through menopause, physical and emotional struggles often force people to change their working patterns, cut back their hours or drop out of the workforce altogether. This just doesn't affect our day-to-day lives, it often knocks our long-term financial plans off track too.' She added that workers could boost their retirement prospects by taking straightforward steps such as checking pension balances, reviewing retirement goals and considering whether employers would match additional pension contributions.
