According to the ONS, nearly a quarter of the UK population (24%) will be 65 or older by 2042, and they predict around five times as many 65-69 year-olds will be economically active in 2067 (50.55% of the age band) compared with 1992 (10.21%).
Statistics clearly show that Britons are living longer (although with Brexit, I think some of us may be losing the will to live)! While a long life can be a good thing, longevity also brings with it some unique financial challenges. Our ageing population is drastically altering the economic landscape of the UK, the latest figures from the Office for National Statistics (ONS) have indicated.
Offsetting financial stability
Longevity, while clearly beneficial for individuals and society as a whole, is a financial risk for governments and defined-pension providers who will have to pay out more in benefits and pensions than originally anticipated.
But it may also be a financial risk to individuals who could run out of retirement resources themselves. These risks build slowly over time, but if not addressed soon could have large negative effects on already weakened private and public sector balance sheets, making them more vulnerable to other shocks and potentially offsetting financial stability.
Old age dependency
There has also been a 29% increase in the number of working women aged 60 to 64, the data showed. As a result, the ONS has suggested the old age dependency ratio – the traditional measure of the population age structure – is ‘outdated’, as more people work up to and beyond the State Pension age.
An ageing population pushes out the age people are choosing to retire. The pension freedoms and changing attitudes towards work have enabled individuals to adopt a more transitional approach to retirement. More and more people are staying in work longer and gradually reducing their hours. Those who keep working are also contributing to the country’s economy. Indeed, many who have stopped working also contribute by providing unpaid care to family members.
Social care needs
As the ONS figures suggest, the ageing population is redefining the way people work into retirement. However, it is expected that increasing numbers will also need social care in later life as a result. The survey found that 40% of people in the UK see losing their independence as a retirement concern, while a third (29%) said they were concerned about needing to move into a nursing home in retirement.
Qualifying for local authority funding for care costs
If you have savings and assets of more than the amount in this table, you will have to pay for your own care:
Region Savings threshold for local authority funding in 2019/20
Wales £24,000 (care at home) or £50,000 (care in a care home)
Northern Ireland £23,250
If your income and savings are above this limit, you do have the right to a care needs assessment, regardless of your financial situation.
Supporting longer lives
According to The Lancet, it is predicted that 2.8 million people over the age of 65 will require nursing and social care by 2025. Increased longevity is a point of celebration, but a consequence of living longer is that people need to have adequate funds to support their longer lives – and with increasing numbers facing the need for social care, plans need to be put in place to fund it.
The funding of social care is an emotive subject, but there’s a very audible message that people want to remain in their own home rather than having to sell it as a means of paying for residential social care. Individuals need to have a clear understanding of what they’ll be expected to pay should they need care, and there should be an overall limit or ‘cap’ on their share of care costs (but that requires a change in current policy from Government).
Achieve your long-term financial goals
If you would like to find out more about how we can help you to achieve your long-term financial goals and mitigate money worries in later life, please get in touch. We look forward to hearing from you.