Quarter of working age people don’t think they’ll ever be financially independent

A quarter (5.7 million) of the UK working age population don’t think they’ll ever be financially independent, according to Scottish Widows’ latest Retirement Report.

The most commonly cited indicators for achieving financial independence included being debt-free (56%), having sufficient emergency savings (51%) and comfortably meeting daily expenses (43%).

Looking at financial resilience, the data published by the pensions firm revealed that nearly two in five (37%) don’t feel confident that they could cover any unexpected financial emergencies, a third (33%) said they don’t have any disposable income at the end of each month, and a similar number (35%) don’t feel they are able to save enough for retirement. Also, 15% haven’t even started preparing for retirement and do not plan to.

Looking into the challenges the nation is facing in preparing for retirement, Scottish Widows’ research highlights the link between people’s sense of financial independence and feeling empowered to take control of their future finances. Affordable housing costs, emergency savings, being debt free, having some extra money after covering expenses – all things which drive a sense of financial independence – are closely linked with people’s willingness to take proactive steps for the future.

Generation Z feel the lack of financial independence most acutely, with 32% of those in their 20s feeling this way, compared with 24% of those in their 50s. People with disabilities (45%) and renters (34%) are also less likely to feel financially independent.

Pete Glancy, Head of Pensions Policy at Scottish Widows, said  “Feeling financially independent is the first step on the road to feeling financially empowered, which is essential when building your retirement income during your working life.

“Savers face a myriad of competing financial challenges – from managing their daily household budget to unplanned emergencies. With 15.3 million people currently at-risk of poverty in retirement, there is a clear need to help people understand how much they will need to cover their living costs in retirement, how much their projected pension is,  and how to take action if needed.”