Action needed to save 18 million from financial squeeze in later life, warns longevity think tank Phoenix Insights

Research by new longevity think tank Phoenix Insights reveals millions at risk of struggling later in life without fresh interventions
Data from inaugural Longer Lives Index finds over 10 million people fear their ability to stay in work up to retirement
7 million people expect to rely significantly on money from friends and family in later life
2 in 5 adults plan to use savings to cover the cost-of-living crisis, showing current inflation will leave lasting impact on people’s finances
Phoenix Insights is calling for government and employers to take action to invest in mid-life reskilling, eradicate workplace ageism and expand policies like auto-enrolment to the self-employed.

As the UK grapples with rising cost of living, a new study published today raises fresh concerns that potentially 18 million people are not adequately preparing financially for later life.

The report, A Crisis of Confidence, shared by longevity think tank Phoenix Insights, part of Phoenix Group, is the first of its kind to reveal data across five areas that are critical to the UK’s response to people living longer – savings, health, work, housing and family support.

Phoenix Insights found that nearly half the population is not confident about their ability to save enough for retirement, largely due to money pressures elsewhere. Even before the cost-of-living crisis we are now seeing, two in five of worried people said they could not afford to put aside enough money for older age while, troublingly, one in five stated that paying off debts was preventing them from saving.

The research also suggests the saving gaps will lead to greater demands being put on family members and a greater need for jobs in later life to plug the holes. However, one in four people are not confident in their ability to secure work and are concerned factors like ill health, discrimination or not having the right skills will stop them from earning and saving what they need for retirement.

This study comes as an additional new poll commissioned by Phoenix Insights reveals two in five (41%) of adults expect to use some or all of their savings to cover the cost-of-living crisis, while 14% have no savings to use at all. The impact of current rising inflation from increased energy tariffs, as well as higher national insurance contributions from April, will mean 27% will save less money for the future.

Life expectancy has increased significantly over the last two centuries thanks to developments in science and public health – children born today have a good chance of living to be 100 years old – and presents a real opportunity for individuals, their families and careers.

Phoenix Insights warns that if we don’t take action now to address the nation’s unpreparedness for living longer, millions may face serious challenges later in life that will only be exacerbated by the current cost-of-living pressures that will have a significant long-term impact on individuals.

The think tank believes this could be avoided and is calling on the government and employers to initiate a range of new measures, such as investing in mid-life retraining, supporting age-inclusive workplaces, bolstering access to pension advice at a younger age and expanding auto-enrolment to the self-employed. (See recommendations below).

Catherine Foot, Director of Phoenix Insights, said:

“Living longer is one of the greatest gifts of the 21st century and we all want to make the most of it. But our report reveals it’s a serious fear for nearly half of us. Millions of people are concerned they may be unable to support themselves financially in later life and are not confident they can act now to improve their financial future. This could leave millions of people facing serious challenges later in life.

“Part of the problem is that we still seem to be living with a mid-20th century model of life, yet so much has changed. Many of us in the UK will spend a third or even more of our adult life over the age of 65 – but it’s going to be hard for lots of us to sustain what could be a 30-year retirement or more from only 40 years of working.

“Though government is facing many other pressures and priorities today, there is no doubt we need to act now to support people to save more and to stay in the workforce if they need to. We all need to come together to radically reimage our approach to work, training, housing and how we tackle health inequalities.”

Phoenix Insights was set up at the end of last year by Phoenix Group, the UK’s largest long-term savings and retirement business, with a mission to transform the way society responds to the possibilities of longer lives. It’s led by Catherine Foot, a leading research and policy expert in the field of ageing and longevity. To help drive forward the national conversation that is needed to ensure the UK rises to the challenges that longer lives can bring, all the findings from the research will be publicly available on a newly created Longer Lives Index data hub: www.thephoenixgroup.com/longerlives

A Crisis of Confidence is based on independent data gathered for Phoenix Insights’ inaugural Longer Lives Index, delivered in partnership with economic consultancy Frontier Economics and based on a large survey of more than 16,000 adults over the age of 25.

Andy Briggs, Group Chief Executive Officer at Phoenix Group and UK Government Business Champion for Older Workers, said:

“Phoenix Group’s social purpose is to help people secure a life of possibilities and that is why we have established Phoenix Insights, to tackle challenges we face as an ageing society and enable everyone in the UK to feel confident about their longer lives. To do that, we need to reimagine how we save, learn, work and live, and we need to start taking action now. We are looking to drive forward the thinking, innovation and changes that will be necessary to enable us all to live better longer lives.”

Key findings from the research:

Savings concerns amongst older individuals – 36% of those who said they were confident about saving enough for retirement had a substantial savings gap (according to their own goals) of over £100,000. This isn’t just young people being overoptimistic either, half of these people were aged over 45.
Keeping it in the family – around one in five people surveyed said they expected to receive significant financial support from their families and friends in later life. However, of these people, 15% aren’t convinced they will get it (the equivalent of 1.1 million people). On the flip side, the same amount of people also said they expected to provide financial support to family and friends. This could create a huge strain on already tight personal budgets.
Working in later life – one in four people are not confident in their ability to secure work and are concerned factors like ill health, discrimination or the wrong skills will stop them from earning and saving what they need for retirement. Though a majority still expects to retire before the State Pension age of 66, a large proportion expects to work into their late sixties and beyond.
Impact of Covid-19 – while for many Covid-19 provided time to save money on not going out, nearly a third (the equivalent of 12 million people) said the pandemic had negatively impacted their long-term financial security. This finding, recorded just before the current cost-of-living crisis, is concerning.
Overconfidence – There is a risk that some people are being overconfident about their futures and not being realistic and honest with themselves. Across the report, men reported higher levels of confidence than women, but both men and women were worried about their physical health impacting their ability to keep working.
Retiree renters – retiring in your own home mortgage free has been found to be unachievable for many. A third of those surveyed said they expected to still be renting in retirement, meanwhile a further third are still paying off their mortgage. The high number of people renting could be very problematic for people’s finances in later life.

Phoenix Insights’ key recommendations:

Eradicate workplace ageism and support skills development and reskilling throughout life – employers must be proactive about tackling age-bias in recruitment and hire age-positively, enable flexible working, support staff with caring responsibilities, and encourage career development and training for staff of all ages.
Tackle regional inequalities and improve pay and progression – the government should use the levelling up agenda to tackle in-work poverty and the prevalence of precarious jobs with very low pay and few prospects for progression. This will help more people to be able to save for the future. Supporting people with health conditions is also critically important, too many people are forced into early retirement due to health problems.
Expanding auto-enrolment – the government should look to cover the millions of self-employed people and those aged under 22 with pension auto-enrolment. Additional defaults should be explored, such as auto-escalation of pension contributions when salary increases, along with nudges when personal circumstances might change that enable greater interest/capacity for saving – for example, children leaving home.
Boost financial information, guidance and education – People should be able to get more holistic financial guidance and advice at a much younger age. We need government and regulators to help make access to good advice and support about our future finances the norm for all of us, rather than the preserve of the wealthy few.

Report and Webinar

You can download a copy of A Crisis of Confidence report from 30 March: www.thephoenixgroup.com/longerlives
You can also access the Longer Lives Index digital data hub to explore the data for yourself from 30 March: www.thephoenixgroup.com/longerlivesindex
On Wednesday 30 March, Phoenix Insights is hosting a webinar to discuss the findings from the Longer Lives Index chaired by Politico’s UK Policy Editor. You can sign up and learn more here