Why retirement is becoming later, less certain and more unequal
Interactive investor’s Great British Retirement Survey 2026 reveals growing pension shortfalls, later retirement, persistent gender inequalities and increasing reliance on AI for financial decisions.
Many of us imagine retirement as a date: the moment we stop working and start living from the pensions and savings we have accumulated.
The reality is becoming much less straightforward.
Last week, I attended a briefing on interactive investor’s Great British Retirement Survey 2026, which draws on responses from 5,000 nationally representative UK adults and a further 2,500 interactive investor customers.
The findings paint a picture of retirement becoming later, less predictable and more financially unequal. People are worried that their savings will not last, many are carrying debt into later life, and a growing number expect to continue working beyond traditional retirement age.
But one of the clearest problems is more fundamental: too many of us do not know what our pensions are likely to provide or whether they are on track for the retirement we want.
Retirement is getting later
Almost one in five people aged 66 and over are still working, up from 12% in 2023. Meanwhile, those approaching retirement expect to stop working considerably later than younger people imagine they will.
People under 30 expect to retire at 60. Those aged between 55 and 65 expect to retire at 67. Current retirees stopped working at 61 on average.
Some of this may reflect choice: work can provide purpose, structure, income and social connection. But for many people, working longer is becoming a financial necessity.
Almost four in ten retirees are unsure whether their savings will last throughout retirement. Rising living costs are the most commonly cited concern, followed by not having saved enough. Almost half of retirees rely on the State Pension as their main source of income. Among retired women, that rises to nearly six in ten.
This matters because retirement can last for several decades. The question is no longer simply, “When will I retire?” It is also, “What income will I have, how long might it need to last, and how flexible will my plans need to be?”
There is a significant gap between expectations and reality
Across the survey, respondents thought they would need approximately £350,000 for a comfortable retirement. They expected to reach around £250,000, leaving a £100,000 gap between what they believed they needed and what they expected to have.
Their current pension savings averaged only £35,000.
These figures need context. The amount any individual needs will depend on their desired lifestyle, housing costs, other savings and investments, State Pension entitlement, retirement age and whether they are planning alone or as part of a household.
A pension pot is also not the same as an annual retirement income. A figure such as £250,000 can sound substantial, but it has to provide income over many years.
The generational figures are particularly striking. Gen X, currently aged approximately 45 to 60, expect to reach retirement with around £150,000, despite believing they need £350,000. Their current pension savings are typically £45,000.
At the same time, 45% of Gen X respondents hold unsecured debt. Nearly one third of those accessing a pension lump sum used it to repay debt, while 18% used it for everyday living costs.
That suggests pensions are not always being used to fund the retirement people planned. In some cases, they are being used to repair financial pressure that has accumulated before retirement.
Women remain at a serious disadvantage
The survey also shows how financial inequalities accumulate across a lifetime.
Women reported average defined-contribution pension savings of £25,000, compared with £45,000 for men. They held £7,500 in cash savings on average, compared with £17,500 for men. Almost three quarters of women had no investments outside their pensions, compared with 58% of men.
The disparity becomes even larger among retirees with defined-contribution pensions. Retired women held £45,000 on average, compared with £175,000 for retired men: a gap of £130,000.
Nearly three quarters of non-retired women were unsure whether their savings would last throughout retirement. More than half did not know how they would manage their retirement income.
This is not simply a confidence problem. Lower lifetime earnings, career breaks, unpaid care and part-time work all affect how much women can contribute to pensions and investments. These differences then compound over decades.
Individual action matters, but women cannot be expected to solve a structural problem alone. Pension policy, employer contributions and auto-enrolment rules also need to reflect the reality of women’s working lives.
Pensions are still being overlooked during divorce
A pension may be one of the largest assets built during a marriage, sometimes worth more than the family home. Yet only one quarter of divorcees surveyed said pensions had been discussed during their divorce.
Divorcees expected to retire with pension wealth of £75,000, compared with £150,000 among single people and £350,000 among married respondents.
Pensions can feel remote and complicated when compared with an immediate asset such as a house. But failing to establish what both partners have accumulated, and whether those pensions should be shared or offset, can leave one person seriously disadvantaged later.
This is particularly important for women who have earned less or taken time away from paid work for caring responsibilities.
Anyone going through a divorce should make sure pensions are included in the full picture of marital assets and consider taking specialist legal and regulated financial advice.
More people are asking AI for financial guidance
The survey found that 26% of respondents use AI to help make financial decisions, rising to 45% among Gen Z.
People are not only asking simple educational questions. They are using AI to explore investing decisions, pension access, tax-free lump sums, pension consolidation and inheritance tax.
Of those using AI for financial help, 71% said they had followed the guidance it provided. Only 17% checked it with a qualified financial adviser, while 9% did not check it against another source at all.
AI can be useful for explaining terminology, preparing questions, comparing general concepts or helping someone understand what information they need. But it does not necessarily know someone’s complete financial circumstances, tax position, pension arrangements, objectives or capacity for risk.
It can help you become better informed. It should not be treated as a regulated financial adviser, particularly when a decision is complex, irreversible or tax-sensitive.
What can you do now?
The scale of the retirement challenge can feel overwhelming, but the first steps do not require you to solve everything immediately.
1. Find out what you already have
Locate your workplace and private pensions, including pots left with previous employers. Check their current values and make sure providers have your correct contact details.
2. Check what is going in
Look at your own contributions, your employer’s contributions and whether your employer offers additional matching. Even a small increase can make a meaningful difference when maintained over many years.
3. Understand how your pension is invested
Find out which fund your pension is invested in, what it costs and whether its level of risk still suits your timeframe. Do not assume that checking the balance means you understand what the pension is doing.
4. Translate your pot into a potential income
Use a retirement calculator to estimate what your current savings and contributions might provide. Model different retirement ages and contribution levels rather than relying on one headline number.
5. Include pensions in major life decisions
Stay engaged with pensions within a relationship. If you are separating or divorcing, make sure pensions are included in discussions about assets.
6. Know when general information is no longer enough
Educational tools, calculators and AI can help you prepare. Complex decisions involving pension withdrawals, divorce, tax, inheritance or transferring benefits may require regulated financial advice.
The survey’s most important message is not that everyone needs to reach the same pension figure. It is that too many people are approaching retirement without enough visibility over what they have, what it may provide and what needs to change.
It’s not about building the perfect retirement plan today, but understanding where you stand and how to make progress.
Source: Read interactive investor’s full Great British Retirement Survey 2026.
Vestpod was invited to attend the survey briefing. This article is independent and was not sponsored by interactive investor.
This article is for educational purposes only and does not constitute financial advice. Pension and tax rules depend on individual circumstances and may change.
