More than 34 million UK adults could face a major life event or financial challenge that negatively affects their retirement plans, according to the latest Scottish Widows Retirement Report.

The research found that 62 per cent of adults could experience a form of financial vulnerability, including ill health, divorce, bereavement, a change in working status, debt, low savings or low financial confidence.

Scottish Widows said these experiences can reduce people’s focus on long-term saving, with 54 per cent of those with vulnerable characteristics saying that putting money aside for retirement increases their financial stress today, compared with 29 per cent of other adults.

Retirement saving was also more likely to feel overwhelming among vulnerable adults, with 61 per cent saying this was the case, compared with 33 per cent of those without vulnerable characteristics.

The report revealed that vulnerability could be compounded among some minority groups.

Two-thirds (66 per cent) of LGBTQ+ adults with a vulnerability said thinking about retirement saving made them feel overwhelmed, while 65 per cent of single mothers reported the same.

Scottish Widows retirement expert, Jill Henderson, said: “Financial vulnerability is something many people face at different points in their life for a variety of reasons.

“It could be because of ill health or going through a major life event like divorce, bereavement or a change in working status, as well as things like debt, having little to no savings or low financial confidence.”

Meanwhile, the research also found that 63 per cent of adults had done little to no research into retirement, while 28 per cent had made no arrangements.

A further 28 per cent had not yet started saving into a pension, while 13 per cent had stopped or reduced their retirement savings during the previous 12 months.

As a result, 60 per cent said they did not feel confident managing their retirement savings, while 66 per cent were worried about running out of money in retirement.

Of those concerned about exhausting their retirement savings, 38 per cent were from an ethnic minority background.

Henderson noted that periods of financial pressure could have a lasting impact on retirement outcomes.

“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."

The report also warned that relying on working for longer may not be realistic for many people.

Almost a third (31 per cent) of adults said they did not think they would be able to afford to stop working at retirement age. This increased to 53 per cent among people with a health concern.

Henderson added: “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.”

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