A mid-life less ordinary?

We are delighted to announce the publication of a new report, A mid-life less ordinary? 

The report, which has been published today (Wednesday, 3 May) by the Centre for Ageing Better and the Resolution Foundation identifies characteristics and incomes of low to middle income households age 50 to State Pension age. It highlights that the recent pay squeeze has left many of Britain’s 1.8 million older low and middle income households struggling to save for retirement, despite enjoying strong employment growth over the last 20 years.

With the electoral spotlight on households on low and middle incomes (LMIs) across Britain – alternatively known as ‘just about managing’, the ‘squeezed middle’ or ‘ordinary working families’ – the report looks at the living standards of the one in three LMI households headed by someone aged between 50 and state pension age.

Public and political debate has tended to focus on issues facing younger LMI households – such as home ownership, welfare support for children and school provision – often contrasting with the perceived affluence of well-off members of the ‘baby boomer’ generation.  But the 1.8 million older LMI households are in neither of these groups and face significant challenges to their living standards at a time when they need to be preparing and saving for retirement.

The lack of attention given to them is all the more surprising given that they are a third more likely to vote than LMI households headed by someone aged under 50.

• Working more than ever. Around three in four people in these households are in work, compared to just 58% in 1997-98. Workers aged 50+ have accounted for two thirds of overall employment growth since 2010, including two thirds of self-employment growth.
• Earning relatively little. Four in five workers earn less than the typical annual salary of £21,000, while half of working women from older LMI households earn less than £12,600.
• Far less wealthy than their better-off peers. Their typical level of wealth (including housing, pensions and other savings) is, at £245,000, less than a third of the wealth held by higher income households (£825,000) of the same age.

The report finds older people in LMI households face two key living standards challenges; living alone and saving for retirement.

The proportion of older LMI households comprised of single people has almost doubled over the last 20 years to 38%. This rise – largely due to increased divorce rates – presents a big challenge given the extra resources placed on living as a single person, such as higher housing costs.

Older households’ ability to save for retirement has been helped by strong employment growth over the last 20 years. However, this hasn’t been enough to prevent a sharp income squeeze in the wake of the financial crisis, when typical incomes fell by 6%.

As a result, typical incomes for older LMI households in 2014-15 had only just recovered back to pre-crisis levels (2007-08), and half of these households had less than a month’s worth of income in savings.

The report says that government and employers have a key role to play in improving the labour market experiences of older workers to help them work for longer, save more and boost their incomes in retirement.

Anna Dixon, Chief Executive at the Centre for Ageing Better, said:

“The ‘baby boomer’ generation is often talked about as a homogenous group, widely reported as being wealthier and more successful than other generations. But this report sheds light on the ‘forgotten fifties’ who earn less than the average salary and who will likely struggle to save adequately for their retirement.

“It is important that this group and their specific challenges are recognised and that the next government addresses their needs. Our report shows positive employment growth for this group, but incomes are still low. More needs to be done to ensure that people in later life are supported to progress, develop and have access to good quality roles.

“Doing so is as important for this group today as it will be for the next generation, who will also likely face even greater pressures on living standards – not least the higher cost of housing from private renting.”

David Finch, Senior Economic Analyst at the Resolution Foundation, said:

“Support for families on low and middle incomes will be a key election issue. But these families inevitably face a wide range of challenges. The living standards concerns of a low income family with young children will be very different to those of a single person struggling to save for their impending retirement.

“Older households on modest incomes have experienced something of a jobs boom over the last two decades. But this hasn’t been enough to prevent a tight income squeeze in recent years that has left many struggling to save for their retirement.

“The best way to help Britain’s two million older households on low and middle incomes is get Britain’s jobs boom back on track. This should be a top priority for the next government.”