New findings from the Financial Conduct Authority (FCA) have sounded the alarm on how unprepared many UK adults are for retirement. The regulator’s latest Financial Lives survey reveals a troubling picture: 19% of working-age adults have no private pension at all, while 41% are currently not contributing to one. For many, the future may hold a financial shortfall which the state pension alone will struggle to fill.

A third (33%) of defined contribution (DC) pension holders have less than £10,000 saved. That may be less concerning for someone in their 20s, but it’s a red flag for anyone approaching middle age. At the heart of the issue is a worrying lack of engagement and understanding around long-term financial planning: 22% of non-retirees say they don’t understand their retirement options, while nearly a third (31%) admit they haven’t even thought about how they’ll manage financially in later life.

COVERING MORE THAN THE BASICS

The full state pension currently stands at just under £12,000 per year. While it might cover the basics—housing, utilities, food—it leaves little room for discretionary spending or unexpected expenses. For many people, that simply won’t be enough to sustain the lifestyle they envision in retirement. That’s why having a mix of income sources—such as a workplace pension, personal pension, ISAs, and cash savings—is essential.

Yet many are clearly falling short, with a growing number relying solely on cash. The FCA found 61% of adults with investible assets of £10,000 or more were holding at least three-quarters of those assets in cash. Part of this may be due to recent high interest rates, which have made cash savings accounts more attractive. However, over the long term, cash typically underperforms investments like equities—especially when inflation is factored in. Hoarding cash instead of investing it can erode future purchasing power, particularly over longer periods.

FIVE PRACTICAL TIPS TO GET YOUR FINANCES ON TRACK

If you’re feeling behind or unsure where to start with your retirement planning, here are five actionable steps that could make a big difference.

1 

Boost your workplace pension contributions. Auto-enrolment requires a minimum 8% of your salary to be contributed to a pension—split between you, your employer, and the government. But this is just the floor. Many employers offer to match higher employee contributions, essentially giving you free money. If you’re self-employed, consider a SIPP (Self-Invested Personal Pension) or a Lifetime ISA for tax-efficient retirement savings.

2 

Top up your personal pension. If you’re managing your own pension and still earning, even small additional monthly contributions (£30–£50) can add up over time. Think of it as trading a few extras now for more financial freedom later.

3 

Consolidate old pensions. If you’ve had multiple jobs, you may have several pension pots scattered across providers. Combining them could save on fees and make it easier to track your progress. Just check whether there are any exit penalties or loss of valuable benefits before you switch.

4 

Shop around beyond the basics. Many of us compare home or car insurance, but don’t apply the same due diligence to financial advisers, pension providers, or investment platforms. A little research can result in better service and lower costs.

5 

Invest idle cash. While having an emergency fund is vital, holding excessive amounts in cash may limit your long-term growth. Investing can feel daunting, but with time on your side, even modest risk could pay off. Historically, equities have delivered better returns than cash over the long run.

The FCA’s findings show many people in the UK are setting themselves up for a stark retirement by saving too little, too late. The sooner you take control of your finances—whether that’s increasing pension contributions, seeking advice, or learning about investing—the better your chances of enjoying a comfortable retirement. While it may be difficult to prioritise retirement planning amid rising living costs, small steps taken today can have a big impact on your wealth in the future.

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