Financial insecurity in old age has always been a cause of concern for people. Unfortunately, an ageing population does nothing to quell these worries. By 2040, nearly one in four people in the UK will be aged 65 or over. Babies born now, in 2022, are expected to hit an average of 90 years. This is a problem in that naturally, in having to live longer, money has to be made to stretch further.
This is not helped by a steep rise in the age eligibility for the UK State Pension. In 2010, you could receive the standard benefit once you hit 60 years old. It’s currently 66 years and rising - sharply. So sharply, in fact, this has increased a huge six years in less than half a generation.
This is assuming too, that people continue to work until they reach 66 years old. Some older persons are forced to reduce their working hours due to ill-health or even stop working altogether. Studies show the majority of UK people are out of work by the time they hit State Pension age - 40% of men and just 30% of women. This was further affected by the Coronavirus pandemic, which saw 2.7 million workers aged 50 or older furloughed.
Also, older persons are less likely to be employed due to age discrimination. Age discrimination cases account for about 20-25% of all Equal Employment Opportunity Commission (EEOC) cases. Although, as it can be difficult to prove, discrimination figures could in fact be higher.
Unfortunately, two million pensioners are now living in poverty. Many countries, including the UK, have social protection systems insufficient to secure peoples’ income until the end of their lives. Statistics also show that the number of older people owning their homes is decreasing. Only half of current middle-aged people own their own homes. Currently, 75% of older people own their homes outright, so these numbers are set to drop sharply in the next twenty years.
If you are registered as having a disability for which you receive support from the government, this can only increase anxiety about your long-term financial future. Disability affects 40% of older people aged 60 and over and government disability benefits are not generous. You are also less likely to be employed, either due to discrimination or ill-health.
Women, in particular, are at risk of financial insecurity. Men account for two-thirds of the self-employed population. Men also now earn 17.9% more than women on average per hour. The female employment rate is 72% compared to the male rate (79%), with the part-time work figures three times higher for men.
The latest Age figures from 2022 state too that millions of pensioners on a low income are also missing out on their share of £3.8bn, because they are not claiming vital benefits such as Pension Credit which could make a huge difference to their weekly incomes. It is also estimated that the poorest older households will need to “drastically increase the percentage of their net income spent on essential goods and services” from 67% in 2021-22 to 79% in 2022-23 due to higher costs of living.
Not claiming benefits they are eligible for, as well as higher costs of living, can also significantly affect an elderly person’s financial future.