UK household incomes will see the weakest growth in modern history while pensioner incomes rise 5 per cent by 2029–30, according to analysis from the Resolution Foundation.
According to the Living Standards Outlook 2025, typical working-age households won’t be better off in 2024–25 than before the pandemic, with real incomes expected to stay flat or drop by up to 3 per cent.
Meanwhile, pensioner incomes are projected to rise by 5 per cent in real terms between 2024–25 and 2029–30, primarily due to the state pension triple lock. But PensionBee warns this modest increase masks deeper retirement savings challenges for millions of savers.
The report says: “Some parts of the population are set to fare better than others. The typical pensioner’s household income is projected to rise by 5 per cent between 2024-25 and 2029-30… aided by above-inflation state pension increases each year.”
Ongoing challenges like pandemic fallout, high energy costs, and slow wage growth are to blame. Inflation may have eased, but energy bills remain 13 per cent above pre-crisis levels, employment has yet to fully recover, and real wage growth is slowing. As a result, the research warns that 400,000 more children could fall into absolute poverty next year, with inequality set to deepen unless policies change.
Tax freezes and benefit cuts, including the two-child limit, are adding further strain on low-income families, factors advisers and providers must consider in long-term planning.
The Foundation says this parliament will be defined by falling living standards, rising poverty, and missed chances for reform. It says advisers and policymakers must now focus on resilience, retirement adequacy, and smarter fiscal policy.
PensionBee chief business officer UK Lisa Picardo says: “A modest increase in pensioner incomes may offer some reassurance, but it won’t be enough to guarantee a comfortable retirement – especially as everyday costs continue to rise and life expectancy increases. Too many people are still underestimating the level of savings needed to maintain their standard of living in later life.
“Relying solely on the state pension or a workplace scheme where only the minimum has been put aside is unlikely to provide the financial security most aspire to. It’s crucial that individuals take proactive steps to take control of their retirement journey – whether that’s consolidating old pensions, boosting contributions where possible, making an active investment choice that’s more suited to their retirement goals, or simply gaining a clearer understanding of what their future retirement income might look like.
“The earlier people engage with their pensions, to make the most of what they have and contemplate what more they can do to help their future selves, the more options they’ll have when it comes to shaping the kind of retirement they want and deserve.”
