The UK's senior citizens - the great unloved?

There are more of them than ever before, and the numbers are only going to swell even more in the future. And although they put so much back into society – at least £25 billion a year – a third of them believe the UK society treats them badly.

Over the past few months, I’ve been working with MGM Advantage on a report that looks into the financial and emotional well-being of the UK’s older generations. ‘Our Retirement Nation’ delved under the skin of today’s senior citizens to find out how they spent their time, what their greatest worries and regrets in life were, and how they think they fit into society today.

On the whole, I thought it made positive reading. Yes, life is tough, and lack of money and failing health are the two biggest worries. Today’s older generations don’t want to be a burden on others and they worry about how to make ends meet.

But they are generally a happy and content bunch.

The biggest number fell into the category that was able to maintain the same lifestyle in retirement, as well as treat themselves occasionally. They don’t live the high life. Instead of wining and dining they might stay in and watch telly or go – when invited – around to friends and family. But they seem to be enjoying themselves, and the freedom they have.

So, I reckon that sounds OK.

Looking at the research, there were three big areas that hit me square in the face. All of which, we – and by that I mean the financial services industry – can do something about.

1.       The first was the practice of buying an annuity was far from perfect. Almost a third hadn’t heard of the open market option (31%). Which is frightening. A fifth didn’t realise the negative impact of inflation and over a half (54%) were not aware of any way to offset it. So, imagine where they will be in 20 or 30 years’ time. And 72% didn’t know that even mild medical conditions like high blood pressure could get them a higher income through an enhanced annuity.

Obviously, we are a long way off getting this right. This part of the UK population should be more aware of the choices they face and the risks they undertake. And this responsibility falls at our feet. All of us should be doing more to educate people approaching retirement and get them to seek out the best way forward. Because they are not automatically going to wake up tomorrow saying “today I must use my open market option to buy an annuity, on the best market rates, preferably on enhanced terms. Now what’s the web address again for Money Advice Service’s annuity tables?”

2.       Secondly, the question of how to fund long-term care is being brushed under the carpet. Almost half the survey didn’t envisage having to use private wealth for that purpose – either thinking they were going to rely on the State or not even having a clue how to solve this problem. But nearly a fifth planned on using the children’s inheritance (wonder if anyone had told the kids yet?), and 26% were going to use the value of their property.

Problem is most of them have already earmarked the property as either a pension top-up plan, a children’s inheritance, or a contingency fund if it all goes horribly wrong. Or more likely all three. And that’s if they can bring themselves to sell up at all. That £100,000 equity is expected to go a long long way.

3.       Lastly, the biggest regret people had was that they had not saved enough in their working life. You can’t make a silk purse out of a sow’s ear, and the nasty truth is unless we get more people to save more money, many more will fall into the ‘restricted’ category according to MGM’s wonderful description of how the Retirement Nation is made up, rather than ‘aspiring’ or ‘comfortable’.

 

And that’s why automatic enrolment is the make or break deal it is. Delaying enrolment for all employers and putting full contributions on hold for another year is less than ideal, to say the very least. But the big question is how to keep the momentum going. To keep people talking about what’s happening and why automatic enrolment has been introduced. And – crucially - to keep them from opting out.

 

To merely rely on inertia and apathy is the wrong approach. It may get people into saving. But it won’t keep them in saving. And it won’t stop them from opting out, once somebody close whispers in their ear that they can save 3% of their wage packet. And it won’t get them saving enough money to have the kind of retirement so many both want and need.