Most UK pension savers believe they will fall short of a comfortable retirement, with rising debt, delayed retirement and low levels of financial knowledge fuelling concerns across all generations, according to Interactive Investor’s sixth Great British Retirement Survey.

The research, conducted with Opinium Research and based on responses from 9,000 people, found that six in 10 savers expect retirement wealth of less than £300,000, well below the £330,000 benchmark estimated by the Pensions UK Retirement Living Standards (RLS) for a moderate retirement.

Gen X (aged 45-60) face a particularly acute shortfall, with respondents in this group expecting average pension wealth of £150,000, but say £350,000 is needed for comfort, with half unsure how they will manage their income in retirement.

Persistent gender gaps were also highlighted, with women expecting average pension wealth of £150,000 by retirement compared with £250,000 for men, while divorcees expect just £75,000.

Meanwhile, the findings pointed to a sharp increase in unsecured debt, with 43 per cent of respondents holding unsecured debt compared to 39 per cent in 2023.

In addition, more than one-quarter (27 per cent) of Gen Z respondents reported defaulting on a bill or debt payment for three or more months in the last six months.

A lack of retirement savings has also meant that people are staying in work longer, delaying retirement.

The survey found that just one in 10 people in their late 50s now describe themselves as retired, down from 15 per cent two years ago, according to the survey, which also revealed that over half (56 per cent) of those aged 61-65 remain in work.

Knowledge gaps also remain a key concern, with the survey revealing that 42 per cent of respondents do not know the pension pot required for a comfortable retirement, while 46 per cent are unaware whether their pension fund de-risks as they approach retirement.

"Alarmingly", nearly three-quarters (74 per cent) of over-40s are unaware of the government’s plan to bring pensions into scope for inheritance tax from 2027.

Commenting on the findings, Interactive Investor chief executive, Richard Wilson, said that rising costs have “eroded” the financial security of many families.

“More people are in debt than two years ago, and older workers are responding by working harder for longer. Many pension savers are on track for financial insecurity in retirement, and they are increasingly worried,” he warned.

Echoing this, Interactive Investor personal finance editor, Craig Rickman, says the impact of the cost-of-living crisis is being "keenly felt" across all demographics, notably those close to retirement, with many planning to remain in the workforce longer than previously intended.

“The perfect storm of fewer people retiring with defined benefit pensions, higher living costs, and a rising state pension age is triggering a major shift in how people approach later-life planning," he explained.

“In previous years, most workers aimed for a ‘hard stop’ retirement, but this will become rarer as time goes on, replaced by more nuanced and varied approaches.”

With this in mind, Interactive Investor has called for greater engagement and consistency in the system, urging policymakers to commit to fewer changes in pension rules, raise minimum auto-enrolment contributions, and expand financial education.

"If we can change the culture around pensions and make it something everyone can actively engage with rather than passively accept, we may well be able to break at least some of that sense of overwhelming fatigue and confusion," urged Wilson.

“We hope the data in this survey - though a sober read - gives our industry and the government some food for thought, and actionable next steps,” he added.

---