Government policies aimed at encouraging people to work longer are inadvertently exacerbating financial insecurity for those in their 60s who cannot meet these expectations, according to new research from the Centre for Aging Better. The study highlights a growing disparity between financially secure sixty-somethings and a substantial minority struggling with money troubles as they approach retirement age.

New analysis of data from the English Longitudinal Study of Ageing indicates that approximately 29 percent of individuals aged 60-69 in England are currently facing financial hardship. This group, comprising around 1.8 million people, is characterized by low weekly incomes (£326 or less), reliance on benefits, or renting their homes. Projections suggest this number could exceed two million within the next decade.

Conversely, the remaining 71 percent of this age group are considered financially secure, often possessing pensions, savings, property, and stable incomes. Factors such as owning a home outright, expecting an inheritance, or having a private pension significantly increase the likelihood of being in this more comfortable financial position.

Factors Contributing to Financial Insecurity

The Centre for Aging Better identified several demographic and circumstantial factors that make individuals more vulnerable to financial insecurity in their 60s. These include being female, single, belonging to a racial minority, having fair or poor health, renting, possessing lower educational attainment, receiving benefits, or acting as a caregiver for friends or family. The report also notes that sudden, unrecoverable financial shocks experienced in one's 50s or 60s—such as business failure, serious illness, relationship breakdown, or significant home repair costs—can push individuals into precarious circumstances, leading to increased debt and a reliance on benefits.

Challenges to Extended Working Lives

While government initiatives like auto-enrolment in pensions, pension freedoms, and the phasing out of mandatory retirement ages encourage people to work longer, this expectation is often unrealistic for those facing barriers. The Centre for Aging Better argues that expecting individuals with health issues, caregiving responsibilities, or other employment limitations to extend their working lives places an undue burden on them. Current policy frameworks are seen as inadequate in supporting those who cannot work longer or lack the financial resources to weather economic downturns.

Policy Recommendations

The Centre for Aging Better is calling for a comprehensive review of government policies affecting individuals in their 60s before any further increases to the state pension age. Key recommendations include:

  • Reviewing the transition between working-age benefits and the state pension, and assessing the impact of increased work on benefit entitlements.
  • Strengthening financial protections for those in their 60s who are unable to work before reaching state pension age, as they often face sharp income drops and limited support.
  • Exploring earlier access to pension income for those unable to work and evaluating the adequacy of existing working-age benefits for this demographic.

The report estimates that enhancing Universal Credit payments by 20 percent for those aged 66 during the current period of state pension age increases would cost approximately £140 million annually, a fraction of the estimated £10 billion in annual savings generated by raising the pension age.

With 6.4 million people aged 60-69 in England in 2023, a number projected to rise to 7.2 million by 2033, the Centre for Aging Better warns that without targeted policy interventions, the number of individuals facing precarity in later life is likely to grow significantly.