Financing Our Future

What is it?

We’re entering a new era of ageing. As people continue to live longer, and the state pension age continues to rise, retirement as we’ve known it no longer exists. For the first time ever, there are more people in the world over 65 than under five. That means fewer young people to support us in our older years, and more responsibility for us to keep working and saving to support ourselves.

We’re facing a bigger than ever generational wealth gap between Baby Boomers and their Millennial children, who aren’t necessarily in a position to support their parents as they age. Millennials, hit by the Great Recession, the affordable housing crisis and the pandemic, are still too busy paying off debts to be saving money for later. The way we approach and fund our later years is changing radically and there’s no longer one clear path to follow as we age.

Why should I care?

At the Good Futures Inspiration Safari, generational historian Dr Eliza Filby pointed out that Baby Boomers own a disproportionate amount of financial equity in the UK. In the next few years, the majority of that equity is set to be owned by Baby Boomer women. As society’s carers, these women are more likely than men to pass on their wealth during their lifetime, wanting to see the impact of their generosity on their loved ones. Despite a predicted growth in legacy giving, charities need to consider how they can appeal to the values and priorities of this wealthy and generous demographic.

While we’re seeing some promising innovations in fintech around pensions and investments, there’s still huge scope for creativity in the way we approach financial support. A report by HSBC found that women are less confident and less financially prepared for their later years than men. Considering that women are living longer, making up the majority of older people globally, there’s a clear need for making financial support available and accessible for women.

A global discussion is underway about how we support our ageing population, and now is the moment to join in and play a part in influencing the future.

Funding Our Later Years

Pension plans are looking more and more outdated and there are now urgent calls to disrupt the way we’re saving for our later lives. The UK Pensions Dashboard Programme promises “to enable individuals to access their pensions information online, securely and all in one place”, but there are already concerns that these dashboards won’t be interactive enough for the demands of younger users.

While “employment rates among people approaching retirement age have fallen to their lowest levels since 2016”, there are plenty of older people keen to stay active, productive and working. Schemes are cropping up to support them, including Living, Learning and Earning Longer, Barclays Bolder, and courses like the Startup School for Seniors founded by 60-year-old entrepreneur Suzanne Noble.

‘Granpreneurs’ are on the rise. Recent research shows a staggering 67% rise in females over the age of 55 opening business accounts and a 132% rise in those aged over 65. Social enterprise GrandNanny is based on “tapping into the wealth of ‘grand experience’ that comes from employing older adults… enriching a child’s life with the wisdom, patience and life experience of trustworthy older adults in their community.”

The Cost of Care

While there’s limited funding for care through local councils and the NHS, most people have to rely on their own earnings and savings to cover at least part of the cost. Social care reforms promise to help cap the cost of care and offer some support, but recent research shows most people would like the state to contribute more.

There’s insight to be learned from other countries’ successes. Ireland’s Sláintecare reform has funded initiatives like the Age Related Care Team, successfully integrating health services for older people, reducing waiting times for appointments and allowing patients to access a range of services in one visit. There are plans to extend the service to home visits. Sweden has a statutory system of elderly care, where “94% of our elderly live in their own homes, even after developing a need for care and medical treatment… Living at home offers invaluable social benefits and is also cost-efficient – even when the need for care is extensive.”

‘SENEMA’ in Chile promotes positive and active ageing through initiatives like ‘Age Friendly Cities and Communities’. Singapore is implementing an action plan to promote confident ageing, based on the concept of a kampong (village) supporting people of all ages, with local service centres offering critical support and care.

Financial Independence

With families living further apart and people finding themselves more isolated in later life, the question of how older people can maintain financial independence is key. Baby Boomers and the Post-War generation are much less likely to use personal finance apps to manage their money, even though they may be tech-literate. In many cases, a lack of trust is a barrier and a more inclusive approach could be a game changer. Capital One’s Ready, Set, Bank provides a series of video tutorials and a demo site as part of its mission to give people everywhere the tools and confidence to start banking online.

Moneyhub is a data and payments company striving “to be a force for good”. It highlights and supports a new automated movement of funds involving VRPs and sweeping which promise to be a “more secure and cost effective replacement for Direct Debits and card payments… faster and less prone to error.” Tumelo is a software company empowering people to “engage on issues they care about”, allowing users to vote on AGM proposals of companies they’re invested in.

There’s another problem to contend with around different generations and their preferred payment methods. While Millennials and Gen Z are happy making contactless and digital payments, Baby Boomers are more comfortable with credit and the Post-War generation’s comfort zone is the fastest vanishing format: cash and cheques. The Cleva card hopes to address this gap with a payment card especially for carers, enabling care agency staff to pay for things their clients need.

Pensioner Poverty

Now that more and more people are living alone in later life, without traditional family and community structures to support them, the UK can be a tough place to grow old. On top of that, our state pension is one of the lowest in Europe. The State of Ageing 2022 report calls for an Older People’s Commissioner for England, in line with the existing Older People’s Commissioners in Wales and Northern Ireland, to champion the needs of older people, particularly those at greatest risk. But the problem of poverty in older age is global, with the UN calling for policy changes to tackle the issue, especially in less developed countries.

Japan is addressing its ageing population and rising elderly poverty in two ways that are already seeing positive results. The first is a public pension plan that aims to secure basic daily needs of its elderly population, and the second is Long-Term Care Insurance, designed to be flexible and accessible. Singapore’s government has “invested significantly in life-long learning initiatives to boost society’s human capital potential as well as to promote personal development and social integration.”

Independent Age are leading a campaign to help UK pensioners access the financial help they are already due. More than a million pensioners in the UK are not getting the Pensions Credit they are entitled to. This equates to a staggering £2.2 billion earmarked for the poorest pensioners that doesn’t reach them. As fuel poverty hits record highs, and more households are tipped over the edge into fuel poverty, the average weekly payment for Pension Credit could help older people cover fuel and remove the need to juggle between heating their homes or eating. Find out more about Independent Age’s Credit where it's due campaign, here.