7 Ways To Retire Financially Free, As IFS Report Claims 90% UK Workers Are Underfunding Their Retirement Pensions

7 Ways To Retire Financially Free, As IFS Report Claims 90% UK Workers Are Underfunding Their Retirement Pensions

The Institute for Fiscal Studies (IFS) is planning a comprehensive pensions review, in partnership with the Abrdn Financial Fairness Trust, following research which highlighted concerns about the “substantial risks” facing future generations of pensioners.

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Recent research from the IFS revealed that 60 per cent of middle-earning private sector employees who are contributing to a pension are saving less than 8 per cent of their earnings, and nearly 90 per cent are saving less than the 15 per cent of earnings previously recommended by Lord Turner’s Pensions Commission.

Additionally, the IFS said almost all of this saving is coming in the form of “defined contribution” (DC) pensions, which leave individuals, rather than their employers, exposed to market and other risks that may be difficult to manage.

The IFS warned that those retiring with DC pots face considerable difficulty and risk in managing their finances through retirement, with risks around running out of private resources or savers being so cautious that they have a needlessly austere retirement.

The report also noted that an increasing number of those approaching retirement live in more expensive, insecure, private rented accommodation, warning that this could lead to a combination of a disappointingly low standard of living in retirement and/or greater reliance on housing benefit.


  • The Institute for Fiscal Studies (IFS) has announced plans for a comprehensive pensions review.
  • The multi-year review will examine the effects of changing economic conditions and public policies on the future of financial security in retirement, including how these effects differ by gender, ethnicity and across the UK.
  • The review will also consider the impact of changing demographics and longevity trends, as well as the impact on self-employed workers.
  • Reports will be shared over the next two years, with concrete recommendations and options for reform to be presented in Summer 2025.
  • IFS research revealed that 60% of middle-earning private sector employees who are contributing to a pension are saving less than 8% of their earnings. Additionally, nearly 90% are saving less than the 15% of earnings previously recommended by Lord Turner’s Pensions Commission.
  • The review will also consider the risk facing future generations of pensioners and the risk that too many are saving too little for retirement.
  • The Pensions Regulator welcomed the plans for the review and will support the development of industry-led solutions to help ensure people have financial security in retirement.

Here are seven ways to retire financially free:

  1. Start Saving Early: The earlier you start saving for retirement, the more time your money has to grow. You can use tax-advantaged retirement accounts/plans to maximize your savings potential.
  2. Live Below Your Means: Live a modest lifestyle and avoid overspending on unnecessary items. Create a budget and stick to it, and consider downsizing or relocating to a lower cost of living area.
  3. Invest Wisely: Invest your money wisely in a diversified portfolio of stocks, bonds, and other assets. Consider consulting with a financial advisor to help you create an investment strategy that aligns with your risk tolerance and goals.
  4. Maximize Your Income: Consider ways to increase your income, such as taking on a side job or starting a small business. Maximize your earning potential by developing new skills, pursuing advanced education, or seeking a higher-paying job.
  5. Pay Off Debt: Avoid carrying high-interest debt, such as credit card debt, into retirement. Pay off your debts as soon as possible to reduce your financial obligations and free up money for savings.
  6. Plan for Healthcare Costs: Healthcare costs can be a significant expense in retirement. Consider purchasing long-term care insurance or a supplemental health insurance policy to help cover these costs.
  7. Have a Retirement Plan: Develop a retirement plan that takes into account your goals, income, and savings. Monitor your plan regularly and make adjustments as needed to ensure that you stay on track to meet your retirement goals.
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Millions of people have lost faith in the complex and muddled pensions system, preferring to do their own thing by investing in things like buy-to-let property, business or trading directly on the stock market.

Whilst this can work for some, ignoring the many benefits of pension investing, such as tax relief, carries risk.

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