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Pandemic’s Toll: Over-50s Retirees Struggle Financially, Reveal Study
Over-50s who retired at the beginning of the Covid-19 pandemic are facing financial struggles, according to a study conducted by the Institute for Fiscal Studies (IFS). The research reveals that 48% of those who retired between 2020 and 2021 are now living in relative poverty, experiencing lower levels of well-being and lacking access to pensions compared to other retirees.
The IFS suggests that the disruption caused by the pandemic and concerns about health risks may have prompted many older workers to leave their jobs prematurely. In particular, individuals between the ages of 50 and 70 who retired during the initial stages of the pandemic found themselves in a far less comfortable position than those who retired just a year earlier.
The study, which received funding from the Joseph Rowntree Foundation, highlights that retirees in 2020-21 reduced their food spending by an average of £60 per week. Moreover, nearly half of these individuals (49%) had no access to private or state pensions, in contrast to 43% of those who became inactive in 2019-20.
48% of people who retired in the first year of Covid are living in relative poverty, the Institute for Fiscal Studies says.
Paul Johnson from the IFS tells @FelicityHannah on #R4Today they are ‘much poorer’ compared with those who retired a year later.https://t.co/rgyRvjxfGL
— BBC Business (@BBCBusiness) July 7, 2023
To be classified as “in relative poverty,” a couple’s income must be less than £15,400. The report also emphasizes that older people who retire are often unable to re-enter the workforce, leaving them vulnerable to long-term poverty and increased hardship amid the current cost of living crisis.
IFS director Paul Johnson underlined the significant disparity between those who retired during the pandemic and those who retired a year later. He noted that the latter group, resembling pre-pandemic retirees, tends to enjoy a more comfortable lifestyle with access to private pensions, indulging in activities such as golf.
Many companies have expressed concerns about labor shortages in recent years, with job vacancies surpassing one million. Chancellor Jeremy Hunt has made it a priority to encourage individuals over 50 to rejoin the workforce. Acknowledging the issue, the government stated that it is providing support for older workers to facilitate their return to employment, resulting in a decline of nearly 300,000 inactive individuals.
As part of their efforts, the Treasury announced a commitment of £70 million in back-to-work support for the over-50s. This includes the launch of a new online Midlife MOT aimed at assisting individuals in assessing their skills and exploring job opportunities.
