Pensions - Articles - Retirees say modern retirement lasts longer and costs more

Many people picture retirement as a time to relax and enjoy the rewards of years of hard work, from travelling more to spending time with family and hobbies. But new research from Standard Life, a retirement specialist focused entirely on retirement savings and income, suggests the reality is often far more financially demanding than expected.

 

Standard Life’s report reveals nearly a third (31%) of retirees say their standard of living is now worse than before they retired, compared with just one in five (20%) who say it has improved. The findings highlight the pressure many retirees feel once regular earnings stop, particularly as rising living costs continue to affect household budgets.

 

The research points to a clear gap between retirement expectations and reality. Nearly one in five retirees (17%) say they underestimated how much money they would need in retirement, while 16% admit they had not expected retirement to last as long as it has.

 

This comes at a time of growing concern around retirement adequacy more broadly. The Pensions Commission’s interim report recently estimated that around 15 million people are currently not saving adequately for retirement, reinforcing concerns that many future retirees could face similar financial pressures later in life.

 

From inflation spikes and global instability to the lasting impact of the pandemic, many of the factors shaping retirement today would have been difficult to foresee in advance. Personal life events such as raising children, redundancy or divorce can also disrupt long-term saving plans and make retirement harder to prepare for consistently. At the same time, some factors – including more gradual rising living costs and longer life expectancy – can be possible to anticipate and plan for over time.

 

While much of the focus during working life is on building pension savings, many retirees say the biggest challenge comes after they stop working and are faced with understanding how to make that money last throughout retirement. People are increasingly responsible for managing their own retirement savings and how they are used - while many of today’s retirees have defined benefit schemes that provide a guaranteed income, most future retirees will rely on defined contribution pots, often built up across multiple employers, meaning more decisions about how that money is used in retirement.

 

Standard Life’s research highlights how the transition from saving into spending is an area many people feel underprepared for. Around one in eight retirees (12%) say they wish they had a better understanding of how to turn their pension savings into an income, while a similar proportion (12%) regret spending too much too early in retirement.

 

Findings from the Pensions Commission highlight the scale of this challenge. Around 30% of private pension pots are accessed at the earliest possible opportunity, with around half withdrawn in full. Nearly half of this money is spent on large expenses such as cars, holidays or home improvements, raising concerns that some people may be drawing on retirement savings too quickly without fully considering longer-term financial needs.

 

While many retirees face real financial pressures, the findings also highlight the importance of planning early, staying engaged with retirement savings and seeking support where needed.

 

In hindsight, many retirees say earlier action would have made a meaningful difference to their financial security later on. Separate research from Standard Life² looking at the role of major life moments in interrupting long-term saving habits reveals that three in ten (30%) say they wish they had saved more regularly during their working life, while 29% regret not starting pension saving sooner. Others say they wish they had planned more thoroughly for retirement (16%), while 14% regret not making greater use of pension tax benefits while they were working.

 

However, for many retirees, saving consistently was not always straightforward, with retirees highlighting that having children had the biggest impact on their retirement savings (15%), followed by divorce (10%) and redundancy (9%).

 

Mike Ambery, Retirement Savings Director at Standard Life, commented: “Retirement is one of the biggest transitions people will ever make, yet it’s easy to underestimate just how challenging the journey to and through it can feel. People are living longer, costs can remain high long after work finishes, and retirement itself may now last decades rather than years. Recent years have also shown how difficult it can be to predict some of the wider economic and global factors that shape retirement, from inflation spikes and market uncertainty to the lasting impact of the pandemic. It’s understandable that some retirees feel their finances are under greater pressure than they originally anticipated, particularly if they underestimated how much they might need or how long their savings would have to last.

 

“For some retirees, the gap between the retirement they hoped for and the retirement they can realistically afford becomes visible in everyday decisions including fewer meals out, fewer holidays, less socialising and more careful budgeting. At the same time, many people are also discovering that retirement isn’t simply about building savings, but about managing how those savings are used over time. Knowing how to turn a pension pot into a sustainable income, while balancing flexibility and long-term security, can feel complicated.

 

“What’s striking is how many retirees look back wishing they had started saving earlier, contributed more consistently or planned more thoroughly. Life rarely follows a perfectly straight line, and events like raising children, redundancy or divorce can understandably shift financial priorities earlier in life.

 

“At the same time, there are some reasons for optimism. Greater flexibility in how people work and retire, improved access to guidance and smarter digital tools can all help people feel more in control of their long-term finances. Even relatively small contributions made regularly over time can make a meaningful difference later on, particularly when combined with tax relief, employer contributions, and the potential benefits of long-term investment growth.”

 

 

Understand what you’ve got before you make a plan “Pensions can work in very different ways. Some people may have a defined benefit pension that pays a guaranteed income, while others may have one or more pension pots built up over time. Taking a bit of time to understand what you have – and where it is – can make it much easier to plan how those savings will support you in retirement.”

 

Consider the kind of retirement you want “Thinking about the lifestyle you’d like in later life, whether that’s covering the essentials comfortably or enjoying more freedom for travel and hobbies, can help bring savings goals into focus. Tools like Pensions UK’s Retirement Living Standards can be a useful guide, helping turn a broad idea into something you can visualise.”

 

Think carefully about how you might take your income “How savings are turned into income matters just as much as how they’re built. Combining flexible options with some guaranteed income, such as an annuity to cover essentials, can help create a more dependable foundation. It’s a lot to manage alone – if possible, consider speaking to a financial adviser to discuss the best option for you. The government’s free MoneyHelper service can also offer broader guidance.”

 

Be realistic about what retirement might cost “Spending doesn’t stop in retirement, and many people find that essentials, lifestyle choices, and unexpected costs can add up more than expected. Building in some flexibility can help avoid financial pressure later on. Simple rules of thumb can help bring this to life – for example, under Standard Life’s ‘Rule of 300’, people need around £300 in pension savings to generate £1 of guaranteed monthly income – helping to translate everyday spending into what it means for long-term savings.”

 

Stay engaged and keep your plans up to date “Retirement isn’t a one-off decision. Checking in regularly, adjusting withdrawals, and responding to changes in markets or personal circumstances can make a real difference to how long savings last - and how confident you feel about your finances.”