Two new reports document the financial problems this year facing many over 50s on low incomes and also the retired.
Work from the Institute for Fiscal Studies shows the impact of the rising cost of living many see as spiraling this year. The cost of living crunch – Institute For Fiscal Studies – IFS. The poorest are heading for a 3% year-on-year cut in their real benefit levels and living standards. The IFS projects that combined with planned tax increases mean that average take-home pay is likely to fall over the coming year. The rise in inflation is also going to have a detrimental effect on those on low incomes particularly affecting benefits. Those on low incomes therefore will tend to find it hardest to tide themselves over during a period in which their real incomes are eroded. The pattern of rising inflation would mean a 3% real cut in benefits year on year (even before accounting for the removal of the temporary £20 per week uplift in Universal Credit, and the equivalent in Working Tax Credit, back in October). The likely rise in energy costs will also accelerate prices and those households spending a substantial percentage of their income on energy bills will be particularly hard hit.
A new report from Independent Age on poverty affecting older people (https://www.independentage.org/poverty-later-life-how-people-older-age-move-and-out-of-poverty-and-what-should-be-done-to-reduce) shows not everyone is enjoying a financially secure retirement as media reports sometimes portray. A noticeable 1 in 5 older people is in relative income poverty after housing costs. Those facing greater inequalities include groups of private and social renters, black and Asian older people, and single women. The research shows the movement in and out of poverty with 40% of pensioners spending at least one year in poverty in a nine-year period. The changes in social benefit income are the biggest single cause for older people entering and exiting poverty.
This problem becomes more significant with many older workers forced out of the labour market and facing a financially uncertain retirement. Support for older workers from the government is now even more necessary.
Tim Whitaker, Trustee Wise Age