A looming retirement crisis is facing the youngest generation of workers as rising living costs force younger workers to prioritise immediate financial pressures over retirement savings, new research has warned.

The study from pension-tracing platform Raindrop found that 53% of Gen Z respondents had already stopped contributing or planned to cut their contributions over the next year, compared with 35% of millennials, 19% of Gen X and 18% of baby boomers.

The rising cost of living was the main reason younger savers were reviewing their pensions, cited by 28% of Gen Z, against 23% of millennials, 18% of Gen X and 15% of baby boomers.

The potential consequences are already having an impact on younger workers. Nearly half (48%) of Gen Z respondents believed they would have to work longer than originally planned to compensate for shortfalls in their retirement savings, while 47% feared they would not have enough money to retire.

One in five Gen Z respondents did not know where all their pension pots were, highlighting the potential for savings accumulated through previous jobs to go unclaimed or overlooked.

Raindrop, which works with financial providers including Aegon and AJ Bell to help customers trace lost and forgotten pensions, said finding and consolidating existing pension pots could help younger savers strengthen their retirement finances and avoid a "retirement timebomb".

Vivan Shridharani, co-founder and chief commercial officer at Raindrop, said: “It is deeply worrying to see young savers systematically opting out or slashing their contributions in the face of immediate economic pressures. While Gen Z are navigating an unprecedented cost of living squeeze in an already tough economic environment, pausing pension contributions creates a ticking time bomb for their future financial health.”

Shridharani added: "Instead of opting out entirely, young adults should focus on proactive long-term planning. A fifth of Gen Z already admit they don’t know where all their pension pots are."

The research was conducted by Opinium, which surveyed 2,000 UK adults aged 18 and over in early August.

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