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We’re all living longer: Can your finances cope?

Written by: Emma Lunn
People aged 65 or over will account for a growing proportion of the population in years to come. By 2050, one in four people in the UK will be 65 or over; the figure currently stands at around one in five, and in 1998 it was about a sixth.

In the middle of 2018, the UK population was 66.4 million. It’s expected to reach 70.1 million by mid-2029 and 72.9 million by 2041, according to the Office for National Statistics (ONS).

The figures come from an ONS report on the UK population, how it’s changed, why it’s changed and how it’s projected to change in the future. In 50 years’ time, it expects the UK to be home to 8.2 million more people aged 65 years and over – a population roughly the size of present-day London.

Sarah Coates, statistician at the ONS centre for ageing and demography, said: “The structure of the UK’s population is changing: people living longer and having fewer children means the age structure is shifting towards later ages. The ways in which people live are also changing with cohabiting families the fastest-growing family type and more young adults living with their parents.”

This tremendous shift is going to see changes to what we can expect in later life. We are already seeing signs of people taking a more gradual withdrawal from work as retirees blend their balance between work and life to suit their needs.

Earlier this week the Centre for Social Justice (CSJ) suggested raising the State Pension age to 75, saying people staying in work longer would boost the economy by £182bn. However, the Department for Work and Pensions was quick to rule out adopting the proposal as government policy.

Sarah Coles, personal finance analyst at Hargreaves Lansdown, said: “We all want to live as long as possible – it’s just that we’d much rather do it without all the bother of getting old. A third of us are dreading the thought of getting ill as we get older, and a third are worried about our mental health. It’s no wonder that we’re not desperately keen to dwell on the practicalities of old age, but it’s an essential part of our retirement planning.

“As we get older we’re living more of our lives in poor health, so there’s a decent chance we’re going to need some care. Millions of people who need help rely on their families, but as more and more of us live alone in old age, there’s a risk we have nobody to turn to.

“Part of everyone’s plans for retirement include questions about long term care. Ideally we should all have savings and investments put aside to cover the cost. But at the very least we need to factor it into issues such as how much income we draw from our pension or whether we release equity from our homes early in retirement.”

Anne Willmot, age campaign director at Business in the Community, said: “The impact of people living longer will have all manner of consequences, not just socio-political, but also corporate with changing demographics in workplaces across the UK.

“We’re working with companies to get a million more workers into the workplace. Companies must be transparent and publish the number and percentage of older people they employ to show that they are tackling the issue of ageing workforces straight on.

“Responsible businesses are already preparing for both the challenges and opportunities that an ageing population will bring, and putting in place age-friendly policies to make the most of the deep structural change emerging in the UK workforce.”

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