What is the UK Pension crisis and what does it mean for me?

The 40 Year Plan

We have had the same message drummed into us since we were kids. Stick in at school, pass you exams, go to college (or get a trade), work hard, save for a rainy day and when the time comes to retire everything will be just peachy. Unfortunately for many of us, me included, we get to the retirement chapter in life only to find that the plan was not what we were sold, or what we deserved for 40 years of graft.

Retirement is supposed to be a time to relax, travel, and enjoy life—but for millions, it’s turning into a time of financial uncertainty and anxiety. 

What happened to me?

In my case, I took early I took early retirement from a 35 year career in corporate IT, I was at the point at which I dreaded opening up the laptop in the morning and my health was suffering from the stress and the long hours. I had just had enough of flogging myself stupid for a pay check so when the company wanted to cut costs, I did all my numbers, everything looked fine, and so I stuck up my hand.

In the first year I was financial comfortable thanks to my redundancy payment so I took the whole family on holiday to celebrate my 30th wedding adversary and I generally had a great time enjoying my new found freedom.

The second year however was a very different story; reality kicked in when the stock market crashed, making my pension look a little shaky and I found no matter how much I tried I could not fill all the time I had on my hands.

So, as you might expect, I thought, just go back to work! Wrong!

Fast forward a year, despite having a great CV and a ton of experience, I still had no job and I was feeling totally washed up, despairing of ever getting a job again. It seems getting a job in your late 50s is more than a struggle.

So that’s when I realised I had two choices; I could accept that I was at the mercy of the stock market and had to live within my means or I could take a chance and look for a way to generate enough income to at least cover my bills and use the savings for the extras in life.

That’s when I started to look at what opportunities are out there for someone like me to make another income without having to flog my soul to another corporate employer.

What is the current state of UK Pensions in 2025?

The analysis in the attached report reveals a substantial retirement savings gap across all age groups in the UK. While most savers appear on track to achieve the minimum living standard when combined with the State Pension, significant shortfalls exist for moderate and comfortable retirement lifestyles.

“Urgent action is required, particularly for those currently aged 40-60, to increase pension contributions and ensure adequate retirement provision. The gap between current savings levels and moderate living standards represents a looming retirement crisis that requires immediate attention from both individuals and policymakers”.

To get a rough view of where you may be on the road to your retirement pension use the pension calculator that is included in the report to give yourself a heads up. Do take in mind that this pension calculator cannot factor in all of the variables that play into the eventual income and lifestyle so use it as yardstick and not gospel. There are ways to do something about this which is what I want to outline in the rest of this report.

Why is there a pension shortfall?

With the ongoing recovery from Covid and the subsequent financial and cost of living crisis prices are still going up. We are all blatantly aware that world affairs are still in turmoil and may be for some time ahead which continues to cause uncertainty in world markets.

Typically there are four key reasons that there is a gap between the retirement we hoped for and the one we can afford:

• Under performing pensions and investments – many pension funds perform poorly or they move money into safer investments such as cash and bonds as you get older. This gives you more security but typically lesser returns.
• Insufficient contributions – Employers these days are reducing the % contributions they are prepared to match when you put money into your pension. In early life when we have so many demands on our finances it is easy to put off putting so much money into our pension when retirement seems so far away.
• Changing government policy – I am sure I do not need to explain the impact that a cash strapped government is having our future prospects. Whilst the government has maintained the “triple lock” on state pensions they have made detrimental changes to tax and benefits.

Where does this leave us?

It would be easy to look at the pension report and despair if your pension pot and savings are looking like the averages in the report but you can do something about this as long as you take action now.

It is common sense that the longer you leave it the harder it will be to get this sorted out. It might sound like stating the bleeding obvious but “If you do nothing”! “Nothing is going to change”!

When facing any shortfall in retirement income there are some common questions that seem to come up time and time again.

The key questions I hear all the time are:

• We are all living longer these days so will my income last?
• Can I live a comfortable lifestyle without worrying about paying the bills?
• Will I be able to afford to do the things I always wanted to do in retirement or even enough to afford the little luxuries in life?
• What if my or my partner gets ill and we cannot get out to work?
• I have to look after a family member or the gran kids so how will I find time to work?
• Will there be any money left to leave to my family or am I going to be a burden on them in my later years?

For many people this all boils down to being faced with a choice, we:

EITHER – “accept our fate” and adapt our lifestyle to the income, hoping that our savings, investments and pension will see us out. The issue with this is that we are not fully in control of our future income, this is often controlled by pension providers etc…

OR  – we take control of the situation and find a way to generate another income so that we are more in control of our finances.  Even at our age this is achievable, regardless of your experience or existing commitments

How do we bridge the gap in retirement income?

Unless you have a sure fire way to win the lottery or some rich benefactor then it’s time to get a little creative, there are options, even at our age, regardless of experience and regardless of time constraints. If we take two basic scenarios:

1. If you are still working, the recommendation from the report is:
2. “Individuals should aim to contribute at least 15% of their salary to pensions (including employer contributions) to have a reasonable chance of achieving a moderate retirement lifestyle”.
3. If you are like me and took early retirement, are approaching retirement or in retirement with a shortfall in income for the lifestyle you want to live then you could take the opportunity to generate another income to subsidise what you already have.

When I was faced with this dilemma I decided that I was going to give it a shot at looking for another income. I will tell you that at this point I was totally clueless on how I was going to do this, as I said I tried going back to work and that did not end well so I had to find something else. I could have tried to find a little local job doing “stuff” but that would be just be tying me down to a job with low wages and swapping time for money.

At this time I took to watching CNBC every morning to see what was going on in the stock market (hence my pension). There was a guy on there that said “The internet is not going away, it gets bigger every year, and so you need to learn how to make money from it”. 

AH HA! I thought, that sounds interesting.

In 2024 it is estimated that global internet sales was in excess of £6 trillion and will rise to £7* trillion by 2027. So if I could get a fraction of that revenue I figured I would not be doing too badly.

Conclusion

When all my financial planning for my retirement went pear shaped I knew I had a choice and I chose to take a chance on starting an online business that could generate the income I needed to give me and my family the lifestyle I deserved after all those years of toil.

I did my homework and I found an online business education program that had the track record, flexibility and integrity that I was looking for. I knew this was something that I had never done before so I was going to have to learn some new skills, even venture out of my comfort zone which was daunting, but oddly exhilarating because it meant I was taking back control or my future.

Doing something like this at my age is something that will undoubtedly will not be for everyone, and that’s OK, but for me I took the view that why not give it a go. I had nothing to lose! 

Whatever choices you make I wish you the best of luck for a happy and fulfilling retirement. If you want to know more then click on the button below and I will send you a series of four videos in your email that will give you some further insights into online incomes.