A newly-published report has delivered news that will surprise absolutely no one who has ever opened a bank statement: three-quarters of British workers are not on track to retire with a ‘moderate’ income. The report helpfully defines ‘moderate’ as £32,700 per year for a single person, or £45,400 for a couple. That is, in other words, slightly more than the median salary most people are currently earning while still young enough to work. The irony is so thick you could retire on it.
Let us be clear about what this report is actually saying. Most workers will not have enough saved by retirement to live at the same standard they are living right now. Not a luxury standard. Not a “buy a boat and retire to the Cotswolds” standard. A moderate standard. The kind of standard that involves heating your home and occasionally eating food that is not exclusively from the reduced section.
The mathematics here are almost poetic in their cruelty. A worker earning £35,000 today—a perfectly ordinary salary for a perfectly ordinary job—is being told they will not manage to save enough to live on £32,700 in retirement. Which means they need to either earn more money (good luck with that in this economy), save more aggressively (at the expense of, say, eating), or simply work until they physically cannot anymore. The report does not explore this third option, but it is increasingly the de facto retirement plan for millions of people.
The problem is not new, and the report is not saying anything we do not already know. Pension contributions have been squeezed for decades. Real wages have stagnated. House prices have consumed the savings capacity of anyone born after 1985. And the state pension, while a genuine safety net, was never designed to fund a ‘moderate’ lifestyle on its own. It is meant to be topped up by private savings that most people do not have.
But here is where the satire becomes genuinely dark: the report treats this as a discovery, as though it is news that three-quarters of the working population might need to rethink their retirement plans. As though there is some solution hiding in the data that workers have simply failed to implement. The implication is that this is fixable—that people just need to save more, or invest more wisely, or make better financial decisions. It is the financial equivalent of telling someone who cannot afford rent that they should simply buy a house instead.
The report does not mention that saving an extra £500 a month for retirement requires having an extra £500 a month, which most workers do not. It does not address the fact that investing in the stock market requires having capital to invest, which most workers also do not have in sufficient quantities. It certainly does not suggest that perhaps wages should be higher, or that pensions should be more generous, or that the entire system might be structurally broken. Instead, it simply holds up a mirror and says: “Look, most of you are going to be poor when you are old. Please plan accordingly.”
There is a certain grim humour in the idea that the solution to retirement insecurity is better financial planning. It is like telling someone drowning in the ocean that they should have learned to swim better. The advice is technically correct but fundamentally useless. The average worker cannot magic up an extra £10,000 a year in savings by being more disciplined with their budget. The problem is not that workers are bad at saving; it is that the system is designed so that most workers cannot save enough to retire on a moderate income.
So what should you actually do with this information? If you are a worker in the three-quarters who are not on track, do not panic. Panic is for people with options. Instead, accept that retirement as your parents understood it—a clean break from work at 65, living comfortably on savings and a pension—is probably not going to happen for you. That is not a failure of personal finance; it is a feature of the economy you inherited.
If you have any capacity to save, save it. If you have a workplace pension, do not opt out, even if it feels like money you will never see. If you can work a few years longer than you planned, that actually makes a meaningful difference. And if you are young enough that retirement feels impossibly far away, remember that the earlier you start saving, the more time compound interest has to do its work—which is the one part of personal finance that actually works in your favour.
But mostly, do not fall into the trap of thinking this is a personal problem requiring a personal solution. Three-quarters of workers are not on track for retirement because the system is broken, not because three-quarters of workers are bad at planning. The report is correct that most workers will not have a moderate retirement income. What it fails to acknowledge is that this is not a bug in the system; it is the system working exactly as designed—just not for you.