A recent study by the Institute for Fiscal Studies (IFS) indicates that individuals over 50 who retired at the onset of the Covid-19 pandemic are encountering financial difficulties. The research shows that 48% of those who retired between 2020 and 2021 are now facing relative poverty, reporting lower levels of well-being and limited access to pensions compared to their counterparts.
The IFS suggests that concerns related to the pandemic and the disruption it caused may have led many older workers to retire prematurely. Particularly, individuals aged 50 to 70 who retired during the early stages of the pandemic are in a less favorable financial situation compared to those who retired a year earlier.
The study, funded by the Joseph Rowntree Foundation, reveals that retirees in 2020-21 have reduced their weekly food spending by an average of £60. Additionally, almost half of these retirees (49%) do not have access to private or state pensions, in contrast to 43% of those who retired in 2019-20.
48% of individuals who retired in the first year of Covid are experiencing relative poverty, as noted by the Institute for Fiscal Studies.
Paul Johnson from the IFS mentions to @FelicityHannah on #R4Today that they are significantly less affluent compared to those who retired later. https://t.co/rgyRvjxfGL
— BBC Business (@BBCBusiness) July 7, 2023
To fall under “relative poverty,” a couple’s income must be below £15,400. The report also stresses that older retirees often struggle to re-enter the workforce, making them susceptible to long-term financial challenges and increased difficulties amid the current high cost of living.
Paul Johnson, the Director of IFS, pointed out the stark contrast between those who retired during the pandemic and those who retired later. He highlighted that the latter group, resembling pre-pandemic retirees, generally lead a more financially secure life with access to private pensions and engaging in leisure activities like golf.
In recent years, many businesses have voiced concerns about labor shortages, with job vacancies exceeding one million. Chancellor Jeremy Hunt has prioritized encouraging individuals over 50 to return to work. Addressing the situation, the government mentioned that it is offering support to older workers to facilitate their reintegration into the workforce, resulting in a decrease of nearly 300,000 inactive individuals.
As part of these initiatives, the Treasury announced a £70 million commitment for back-to-work support for individuals over 50. This includes the introduction of an online Midlife MOT tool designed to help individuals assess their skills and explore job opportunities.
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