The tale of two 60s: The gulf between the have and have-nots in a decade of change

The number of people at risk of financial insecurity in their 60s will break past the 2 million mark for the first time within the next decade unless the government takes urgent action, a new report from one of the country’s leading ageing charities is warning.

The Tale of Two 60s report from the Centre for Ageing Better highlights a growing divide within this age group with more than a quarter of people (29%) aged 60–69, totalling around 1.8 million people, classified as being in precarious circumstances characterised by financial insecurity.

The remaining 71% in the age group are relatively financially secure, benefiting from pensions, savings, property and stable incomes.

The report is warning that a quarter of a million more people are set to become financially precarious by 2033 without government intervention. The number of financially precarious in their 60s has increased by around 200,000 over the past 20 years.

The research highlights how the financially precarious are significantly more likely to hold certain characteristics. Members of the precarious group are: 

• More likely to be a woman than the secure group.
• More than three times more likely to be single than the secure group.
• Twice as likely to be from a racially minoritised background than the secure group.
• More than four times more likely to have fair or poor health than the secure group.
• Four times as likely to have lower education attainment than the secure group.

The report also found that people in financially precarious circumstances are three times more likely to be caring for a friend or family member, and almost ten times more likely to be receiving state benefits than the secure.

On the other hand, owning a home outright with no mortgage, being the expectant beneficiary of an inheritance and being a member of a private pension scheme were all twice as likely among members of the financially secure compared to the precarious.

The newly-published research from the Centre for Ageing Better reveals that many people in financially precarious circumstances experience sudden shocks in their late 50s or 60s, such as business failure, ill-health or relationship breakdown, that they were unable to recover from which led to increased debt, reliance on benefits and worsening living standards.

Other financial shocks that were difficult to recover from include moving back to the UK from overseas and costly house repairs.

“Over the past two decades, policy changes have reshaped the landscape of pensions and work in later life," Henry Allingham continues. "Increases to the state pension age, the introduction of auto-enrolment, greater pension freedoms, and the end of forced retirement have all encouraged people to work longer. But for many in a financially precarious situation, the expectation that they will work longer is unrealistic given their health, caring responsibilities or other barriers to work.

“Urgent action is needed both to support those currently affected, and to prevent future generations from entering older age without financial security. Current policy frameworks are not adequately supporting those who cannot work longer or who lack the financial resources to absorb shocks.  Without urgent and targeted policy action, the number of people facing precarity in later life is almost certain to grow and grow.”

The necessity for government action to support this age group will only grow in the future as this cohort continues to grow. 

The report highlights how the population in this age group has grown by almost 40% in 20 years - from 4.6 million in 2003 to 6.4 million in 2023. 

It is projected to grow by a further 13% to 7.2 million by 2033.

As previous ONS research has indicated, the 60-69 age group is projected to have the greatest increase in economic activity rates up to the year 2067.

This could be a significant driver of economic growth but only, the researchers point out, with the right government policy to support it.

Amongst its policy proposals, the newly-published report calls for improved clarity, certainty and trust in the benefits system. Researchers found people in their 60s found it difficult navigating the transition between working-age benefits and the State Pension.

The report recommends the government review how the benefits system supports older claimants, including clarifying how entering or increasing work affects entitlements and improving understanding of the transition from working-age to pension-age benefits.

Researchers also identified a gap for those unable to work before reaching state pension age, who often face sharp income drops and limited support.

The report calls on the government to strengthen financial protection for the 60s age group, potentially by exploring earlier access to elements of pension income for those unable to work or through reviewing the adequacy of working-age benefits for those approaching retirement.

For example, enhancing Universal Credit payments by 20% for those aged 66 during the current period where the state pension age is rising to 67 would cost approximately £140 million – a small fraction of the £10 billion annual fiscal savings created by the increase.

The Centre for Ageing Better is also calling on the government to take a more holistic approach to people in their 60s by undertaking a comprehensive review of how policy supports this group, before making any further increases to state pension age.

“Those living financially precarious lives experience multiple, overlapping disadvantages," continues Dr Barry. "They are more likely to have low incomes, little or no savings, and no private pension, and to rely on state benefits. They are also less likely to be in work and more likely to live in rented accommodation. As a result, they have limited financial resilience and are particularly vulnerable to life shocks. Even where a modest safety net exists, such as small savings or family support, they are often insufficient to prevent long-term financial hardship."

“Facing these challenges is often an unavoidable fact of life. However, being driven into financial hardship as a result can be avoided if structures exist to prepare people and support them when challenges arise. The challenges for people in their 60s that this report highlights are not inevitabilities. Barriers to good work and retirement can and must be tackled for those in their 60s now, and in the future, and this needs to be a much higher priority for government to address than it is currently.”