A new report called ‘A Mid-Life Less Ordinary’ has highlighted that 1.8 million of Britain’s older low and middle income households are struggling to save for retirement.
The Centre for Ageing Better and the Resolution Foundation has identified that the recent pay squeeze has meant that many people aged 50+ are not saving enough for their retirement.
With the electoral spotlight on households on low and middle incomes (LMIs) across Britain, alternatively known as ‘just about managing’, the ‘squeezed middle’ or ‘ordinary working families’, the report looks at the living standards of the one in three LMI households headed by someone aged between 50 and State Pension age.
It finds that older people in LMI households are:
- Working more than ever. Around three in four people in these households are in work, compared to just 58% in 1997-98. Workers aged 50+ have accounted for two thirds of overall employment growth since 2010, including two thirds of self-employment growth.
- Earning relatively little. Four in five workers earn less than the typical annual salary of £21,000, while half of working women from older LMI households earn less than £12,600.
- Far less wealthy than their better-off peers. Their typical level of wealth (including housing, pensions and other savings) is, at £245,000, less than a third of the wealth held by higher income households (£825,000) of the same age.
Living standards challenges
The report finds older people in LMI households face two key living standards challenges; living alone and saving for retirement.
The proportion of older LMI households comprised of single people has almost doubled over the last 20 years to 38%. This rise, largely due to increased divorce rates, presents a big challenge given the extra resources placed on living as a single person, such as higher housing costs.
Older households’ ability to save for retirement has been helped by strong employment growth over the last 20 years. However, this hasn’t been enough to prevent a sharp income squeeze in the wake of the financial crisis, when typical incomes fell by 6%.
As a result, typical incomes for older LMI households in 2014-15 had only just recovered back to pre-crisis levels (2007-08), and half of these households had less than a month’s worth of income in savings.
Key role for government and employers
The report says that government and employers have a key role to play in improving the labour market experiences of older workers to help them work for longer, save more and boost their incomes in retirement.
Anna Dixon, Chief Executive at the Centre for Ageing Better, said, ‘The “baby boomer” generation is often talked about as a group which is wealthier and more successful than other generations. But this report sheds light on the “forgotten fifties” who earn less than the average salary and who will likely struggle to save adequately for their retirement.’
If you are struggling to save for retirement, you can get free and impartial advice from:
Age UK Shropshire Telford & Wrekin offers information and advice about a range of issues for those over 60 years old including advice on benefits and we can assist with filling in forms.
Citizens Advice Shropshire for those aged 50 or over with a defined contribution pension, they offer confidential guidance about the options available for your pension.