2.2 million over 50s will live to 100!
Another reality check for pensions as over 50s have little time left to save more
Many will need to keep working – preferably part-time
by Dr. Ros Altmann
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Latest figures from the DWP, released today, show that more than 2 million people already over age 50 will reach their 100th birthday! This is fantastic news. We should all be celebrating the tremendous advances in healthcare that have led to such dramatic changes in longevity in the past few decades.
However, the financial implications of this change have still not been adequately factored into our pension system. Living longer poses potential problems for final salary schemes, as pensions have to be paid out for far longer than ever originally envisaged, but at least there should be an employer to help fund the costs. However, those of us without such employer guarantees, may face decades of struggling to survive with inadequate incomes. While life expectancy has been soaring, savings rates, investment returns and annuity rates have fallen sharply, meaning lower pensions all round.
Leaving work in our 50s or early 60s leaves less time to keep saving and could mean missing out on valuable extra income for our ever-longer life. Of course, not everyone will stay fit and healthy enough to work, and not everyone will live to 100, but those who want to keep working need to be encouraged to do so.
Saga’s recent surveys show that 42% of the over 50s want to keep working beyond age 65. However, the labour market does not accommodate this and they face significant age discrimination. In fact, employers have recently complained about the Government’s plans to abolish the Default Retirement Age in 2011 and still want to be allowed to sack workers just for being 65. This is dangerously out of touch with reality.
People are not ‘old’ at 65 any more, so why are we wasting their valuable skills? They have decades of healthy life ahead of them and should not be denied the chance to keep working and earning more money to sustain themselves as they live longer.
As life expectancy keeps rising, there is a whole new phase of life ahead of us, ‘Bonus Years’ when we keep working – preferably part-time – as we get older, instead of expecting to be paid not to work for many decades. Encouraging older people who want and are able to work, to stay on part-time, we will free up some jobs for younger workers too.
Furthermore, for those already in their 50s, it will be almost impossible to save enough by the time they reach their 60s to ensure enough income to last till they are 100. Why keep everyone alive so much longer and then throw them out of the labour force at the same age as before? We need a social revolution to allow us to look forward to a better later life. Then we can all truly celebrate the idea that so many of us will live to be 100.