Why retirement guidance matters — for every employee
Retirement may feel like a distant concern for many, but the way employees engage with their future finances today can have a profound impact on their wellbeing — both now and in the years to come. And the evidence is clear: planning makes a difference.
What’s the issue?
The reality is that millions of working-age people in the UK are not on track for a decent income in retirement. According to the Department for Work and Pensions, 38% of working-age individuals in England, Scotland, and Wales — around 12.5 million people — are projected to retire on an inadequate income.
And the challenge is growing. For those set to reach state pension age in the 2040s (currently aged 42–52), 44% are expected to fall short of their target replacement rate after housing costs. That’s nearly half of a generation heading toward retirement without the financial security they’ll need.
Income targets are generally calculated in one of two ways:
Target Replacement Rate: A relative measure that defines retirement adequacy as a percentage of pre-retirement income, ranging from 80% for low earners to 50% for high earners.
Retirement Living Standards: An absolute measure that sets fixed annual income targets (minimum, moderate, comfortable) based on lifestyle expectations and public consultation.
Planning Pays Off — At Every Income Level
Recent research shows that people who engage in retirement planning are significantly more likely to feel good about their financial situation. In fact:
68% of those who say they do a great deal of planning feel positive about their money
Compared to just 30% of those who do no planning at all
And this isn’t just a trend among higher earners. Among households earning less than £30,000:
Only 29% of active planners find things financially difficult
Compared to 57% of non-planners
Confidence in the Face of Uncertainty
Planning also helps people feel more resilient — especially during challenging times. For example, among lower-income households, those who plan are less likely to say their wellbeing has been affected by the cost of living crisis.
Yet despite these benefits, many employees remain unsure about their retirement options. Women and Gen Xers, in particular, report lower levels of confidence and clarity around their pension income and retirement outlook.
How Employers Can Help
This lack of engagement is regrettable, especially given the clear link between planning and financial wellbeing. But it also presents an opportunity for employers to step in and support their teams.
Offering retirement guidance — through webinars, one-to-one coaching, and tools like cashflow planning software and retirement calculators — can help employees feel more informed, more confident, and more in control. Initiatives like Midlife MOTs can be especially valuable, helping to reinforce skills, financial security, and long-term planning.
The Business Case for Retirement Guidance
Supporting your workforce with retirement guidance isn’t just a nice-to-have — it’s a strategic investment. Businesses that offer meaningful support around pensions and retirement planning often see:
Improved talent retention
Higher pension engagement
Stronger workplace morale
When employees feel valued and supported, they’re more likely to stay — and more likely to thrive.
Retirement planning isn’t just about the future — it’s about improving wellbeing today. And with the right guidance, every employee, regardless of income or career stage, can feel more confident about what lies ahead.
