The vulnerability challenge and what it means for retirement

Vulnerability makes managing money today that much harder – long before retirement saving even comes into the picture. Almost two thirds (64%) of people experiencing vulnerability struggle to manage their day-to-day money, compared with just 29% of people who are not vulnerable. Over a quarter (26%) also feel completely overwhelmed when making financial decisions.

Building a financial buffer is a big part of this. More than one in five (22%) have no savings available to deal with an emergency, meaning a broken boiler or unexpected bill becomes much more than a temporary inconvenience.

That matters because retirement saving does not happen in a vacuum. If somebody is worried about how to cover the bills this month, expecting them to put money aside for 20 or 30 years’ time becomes a much more difficult task.

This reality creates an unavoidable squeeze on long-term planning. More than a quarter (28%) of vulnerable people surveyed say they are making no retirement provision at all, while 13% have stopped or reduced their retirement savings in the past 12 months.

These findings build on something seen clearly in Part One of our 2026 Retirement Report – one of the biggest barriers to saving for retirement is simply the pressure of making ends meet today. People may understand perfectly well that saving for later matters, but that does not mean there is always enough room in the household budget to act on it.

Health is perhaps the clearest example of how vulnerability during our working life can shape what happens closer to retirement. Among people whose physical or mental health affects their day-to-day life, 50% are projected to face pension poverty, almost double the 27% among the rest of the population.

Life rarely gives us one challenge at a time. A health problem can mean fewer hours at work, less money coming in and potentially additional unforeseen costs. Savings can then start to dwindle, debt can build, and financial decisions can suddenly feel much harder and more overwhelming. Over time, these pressures make it harder to save for retirement, with the impact potentially following people long after the immediate challenge has passed.

One setback can quickly snowball into another. And as those pressures build, they can become increasingly difficult to unwind. Our research shows that where there is one vulnerability, this can often reveal multiple others too. That is why we need to understand the whole person behind the vulnerability, spot that chain reaction early and design support that can step in before a temporary period of difficulty becomes a lasting financial problem, with consequences for retirement too.

29% of working-age adults have had their work or earnings affected by health issues in the past five years.”

For the first instalment of our report findings earlier this year, we modelled the difference between increasing pension contributions and simply extending working lives. For DC savers under 30, working for another five years increased average projected pension wealth by around £34,000. Increasing contributions from 8% to 12% on earnings up to £50,000 increased it by around £155,000.

These themes of vulnerability mirror what we see time and again in our research into women and retirement – which we’ll explore in more depth in our dedicated report in November. Women face a higher likelihood of experiencing financial vulnerability at points through their lives. This is driven by everything from structural inequalities and time out of the workforce to have children or other caring duties, to financial literacy or how much influence and control they hold over their day-to-day money.

We know that taking time away from paid work to raise children or care for others doesn’t just mean losing income in the here and now, but also missing years of pension contributions and potential investment growth.

Our Women and Retirement research found that a five-year career break taken at age 35 could leave somebody with almost £70,000 less in their pension by age 67.

That is a striking figure, but the story behind it is very real. People have children, parents get older, somebody becomes ill, work and life changes. Our lives rarely follow a perfectly straight line from first job to retirement – and women are often disproportionately affected.

There is an important, but simple policy point in all of this. If we want to help more people live financially stable lives in retirement, we need to help people build resilience before vulnerability strikes, and offer better support if it does. That means helping people save more when they can, ensuring the state continues to provide an effective safety net for those whose ability to work is limited, and looking at how protection can help households cope when earnings suddenly disappear.

It also means accepting that there will be points when contributing more to a pension simply cannot always be somebody’s immediate priority and the system has to be robust enough to cope with that.