Age UK urges financial services sector to rethink how it helps older
By: Age UK
Published on 26 April 2018 12:00 AM
The Charity publishes new report and figures showing a quarter of all pensioner households have no savings at all.
A fundamental rethink of the approach financial services take towards helping people plan their finances in retirement and the language they use to talk about it is needed, according to a new report by Age UK, if older people are to be helped to be financially resilient. It comes as the latest government figures show that a quarter of all pensioner households have no savings at all.
Research in the Charity’s new report Financial Resilience in Later Life: Who is well placed to cope with life events , published today, found that commonly used terminology such as ‘preparing for life events’ does not resonate with older people. More down to earth alternatives such as ‘getting your house in order’ and ‘managing your affairs’ are better understood and seen as more meaningful.
The research, funded by the Money Advice Service, was undertaken as part of Age UK’s ongoing support for the Financial Capability Strategy, and its Older People in Retirement Steering Group which is dedicated to understanding how older people can be better supported to manage their money well in their later years.
It found that many older people feel that being ‘well placed’ during retirement is being able to cope with what life throws at you – both in terms of preparing for and responding to whatever it is that happens. Older people often reported significant financial challenges in retirement relating to unexpected major events such as serious illness, relationship breakdowns and bereavement. Experts interviewed for the report felt that maximising income, maintaining a buffer against financial shocks, understanding financial products and options and remaining independent were all key to building resilience and coping with significant events in retirement.
In order to help older people be more financially resilient in later life, Age UK is calling for interventions from the financial sector that reflect what it is reasonable to plan for during retirement and that recognise that there are limits in this respect. During the research older people spoke about facing multiple uncertainties, personally in terms of their own longevity and health, and externally in terms of political and economic changes. Those uncertainties about the future mean that the financial services world has to gain more understanding of how the future looks to older people and use more relevant language to describe and discuss financial resilience in later life. In this way they can help older people to find the right balance between ‘being prepared’ with ‘making the most of now’. This is particularly the case with preparation for possible future social care costs, where the research found that the very idea was a disincentive to older people to think positively about how they could take sensible steps to sustain their independence for longer.
The report shows there is only so much that we can ask older people to do to ensure they are well placed to cope with life events during retirement. Every effort to improve financial resilience needs to be matched with an increased focus on improving the wider retirement landscape they are navigating. This means we need to improve the provision, accuracy and accessibility of information and advice from all the sectors older people interact with throughout their retirement. The research also suggests that peer to peer support may be useful in helping older people to take action to sort out their finances.
Commenting on the report, Caroline Abrahams Charity Director at Age UK, said: “We gained a huge amount of insight from listening to older people talk about their attitudes to coping well financially in retirement and we feel that there is much for the Financial Services industry to learn from this research too. In particular, we were struck by the difficult choices facing many older people today in trying to balance making the most of life today with planning for possibilities tomorrow – especially if there was not much money available to them to do so.
“The older people we talked to were mostly highly pragmatic in thinking about what they could realistically plan for and what they couldn’t and it became very clear that much of the conventional language used by the industry about these things didn’t cut through to them at all. They preferred a much more down to earth approach and language, and it was interesting that they also enjoyed and benefited from listening to each other talk about the challenges of financial planning in later life and how best to overcome them.
“The research also showed that approaching the issue of planning for future social care costs directly was a huge turn-off for many older people, because this immediately invoked negative ideas about poor quality care and a loss of health and independence. Instead, it may well be more helpful to focus discussions around what more people can reasonably do to improve their chances of sustaining their independence and quality of life for longer.
“Such is the level of uncertainty today that it is challenging for anyone to sustain their financial resilience as they move through later life, but naturally it is hardest of all for those with the fewest resources to fall back on. Against this context it is deeply concerning that a quarter of all pensioner households have no savings at all. These older people are living from week to week, reliant upon their pension to fund every expense they face, with no money set aside for the inevitable rainy days. The anxieties this must bring for them must be immense, and they are at real risk of experiencing hardship. Above all, this shows how far we still have to go in ensuring that every older person is financially resilient and it gives the lie to the lazy stereotype that the older population is universally well off – sadly this is far from the truth.”
Andy Briscoe, Chair of the Financial Capability Board and the Money Advice Service, commented: “We know that too many older people reach retirement without a plan for how they will be able to live well in their later years, and this can come with very real costs to their quality of life. We all need to do more to address this challenge, and this report makes an important contribution to understanding how we must to adapt and improve our approach to talking to older people about financial capability and resilience.
“It is great to see Age UK taking the lead on this work and showing once again, that it is only by working together – as charities, businesses, and communities – that we can support people to develop the financial capability to make the most of their money throughout their lives.”
Age UK provides a wide range of expert information on money-related issues on the Age UK website: https://www.ageuk.org.uk/information-advice/money-legal. This includes our online benefit checker which allows you to find out, quickly and easily, what benefits you are entitled to. Our online and hard copy information guides cover topics including More money in your pocket and Getting help with debt.
Financial Resilience in Later Life: Who is well placed to cope with life events during retirement follows an evidence review and interviews with experts from the financial world, together with 16 focus groups and eight in-depth interviews with retired couples.