The Social Market Foundation (SMF) has this week warned that over half (54%) of Generation X – born between 1965 and 1980 are heading for an inadequate retirement income, affecting around 7.5 million people. 39% are likely to fall short of maintaining their current standard of living, while 35% could slip below minimum living standards. Nearly two million have no housing equity or other investments, leaving them particularly vulnerable.
Responding to these findings, Steve Butler, Managing Director of Pension Potential, said:
“Gen X is facing a perfect storm. Many missed out on generous defined benefit schemes, and they have not had long enough to accumulate substantial savings through auto-enrolment into defined contribution pensions. Without careful planning, this generation risks a retirement income gap that could leave them financially exposed.”
Butler suggests there are practical steps people can take to secure a more reliable retirement income, with annuities being a useful option, though many are unaware of their advantages.
“Annuities come in many guises and can form the foundation of a secure retirement plan for Gen X,” he explains. “Even modest pensions can work harder and last longer when converted into an annuity. Options such as escalating or inflation-linked annuities can help protect against rising living costs. Using part of a pension to purchase an annuity can cover essentials like rent, utilities, or groceries, while leaving the remaining funds invested for potential growth. Fixed-term annuities can also provide income to bridge gaps until reaching state pension age.”
“With choices to suit different pension sizes and needs, Gen Xers should review their retirement expectations, explore annuity options, and seek professional advice to create a strategy that protects their lifestyle and provides peace of mind for the future.”
Alongside annuities, Butler recommends practical retirement planning tools people can use to better manage their finances including:
- Free online retirement calculators such as the MoneyHelper Pension Calculator, Which? Retirement Planner, and calculators from banks like HSBC and Barclays to project income and highlight potential shortfalls.
- Flexible drawdown strategies to keep part of a pension invested while providing a steady income.
- Budgeting and lifestyle planning using apps like Money Dashboard or Yolt to forecast essential costs and plan spending.
Recent market data from the ABI shows that more people are recognising the value of annuities. The total value of premiums paid into individual pension annuities rose 4% to £7.4 billion in 2025, the highest level since pension freedoms were introduced in 2014. Sales of escalating annuities, which increase payments annually to protect against inflation, also reached their highest level since 2013, rising 10% to just over 18,000.
“For Generation X, even small pension pots can be transformed into a guaranteed income that lasts a lifetime,” Butler concludes. “By combining annuities with retirement calculators, diversified investments, and careful budgeting, it’s possible to create a comprehensive plan that protects your lifestyle and provides peace of mind.”
For more information on Pension Potential, visit: www.pensionpotential.co.uk.