FAILING to save enough for retirement will not only make it hard to enjoy later life, it can damage your health while you are still working.

Research for Scottish Widows found that fears about not having enough to live on are harming many people’s mental well-being, but it also revealed that a timely reality check can spur them into making changes before it is too late.

David Holton, a retirement expert at the investment provider, said: “The link between everyday money worries and mental health is well known. What is less well known is the extent to which longer-term retirement savings, and engagement with their associated issues, contribute to the nation’s mental health.”

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In a poll conducted for the firm, 30 per cent of respondents admitted they got stressed when thinking about how they would cope in retirement, yet 46 per cent of the population are not saving enough to live comfortably in their later years.

When shown a film about the consequences of poverty in old age as part of a follow-up clinical study, most participants demonstrated signs of stress, including twitching, fidgeting, crying and increased pulse rates.

After watching for just three-and-a-half minutes, 90 per cent said they would review how much they were saving.

Behavioural psychologist Jo Hemmings, who led the experiment, said: “Denial of a situation that feels too distant in the future can create a false sense of security that prevents people taking action to resolve it. This is certainly true of retirement planning.

“The purpose of putting money away for a distant older life can feel too abstract and unreal in younger life and can, therefore, be ignored. But this study shows that the smallest injection of reality, in this case a short video, can change people’s priorities and mind-set.”

According to life and pensions firm Aegon, 13 per cent of working-age people in Scotland have increased their pension contributions as a direct result of rule changes introduced in April 2015. These gave greater choice in the way funds invested in defined contribution schemes can be accessed.

However, many others are not paying sufficient attention to their financial future. Three-quarters of those with pension savings have not checked them in the past six months and almost a third have never reviewed their performance.

Meanwhile, one in eight men and one in five women aged 55 to 65 are approaching retirement without any private or workplace pension provision at all.

Many people do not realise how long they are likely to be retired and, therefore, how much money they will need. According to the Office for National Statistics, a man reaching the age of 65 in Scotland can currently expect to live to 82, while women will typically reach 84.

Without sufficient savings, this could mean between 17 and 19 years – and for many people much longer – spent in poverty.

The full annual state pension for individuals retiring this year is just £8,296, and anyone who has not paid 35 complete years of National Insurance contributions will not even get this much.

According to Retirement Advantage six out of ten over-50s do not know exactly how much they will get as they have not asked for a projection.

Andrew Tully, the firm’s pensions technical director, said: “We have seen many changes introduced to the state pension system over the last ten years, which means people need to check their forecast to see how much they will receive.

“Not all state pensions are created equal. Under the new system, the amount received depends on how many qualifying years a person has during which they made National Insurance contributions – but people require a minimum of ten qualifying years to receive anything at all.”

Many people say they will have to keep working beyond state retirement age. However, accountancy firm Mazars pointed out that with 58 per cent of over-60s suffering from at least one long-term health complaint, a significant number will not be well enough.

Liz Ritchie, head of private client services at Mazars, said: “Those thinking they can simply work longer may find themselves unable to and, as a result, with a gap in their finances.

“We all hope our later years will be a time to slow down, relax and enjoy life. To achieve this, we have to make long-term financial planning a priority. This is not just among those newly entering the workforce but also across all ages. It is never too late to help make your finances in later years that bit more comfortable.”

Begin by working out how much annual income you will need to live the kind of life you want. Use online calculators to find out how much you should put away to have a reasonable chance of achieving this. If you are not saving enough, review your spending habits and make changes to free up more cash.

If you are not already part of an employer’s scheme, join as soon as possible, and if you do not have access to one, consult an independent pensions advisor about starting a personal plan.

Kate Smith, head of pensions at Aegon, said: “Saving a modest amount can really add up over the years, and the good news is that a £100 pension contribution, for example, costs you much less than its face value.

“This is because the Government gives people a bonus, so a £100 contribution only costs a basic rate taxpayer £80 in take home pay, and the Government then tops up the pension by £20.”

Get into the habit of checking the performance of your pension savings regularly and increase the amount you put away as necessary.

Mr Holton said: “What’s clear is that when people are forced to consider the reality of retirement, they do recognise the need to be more prepared and are willing to put more money aside.”