Number of Centenarians Rising

Financial analysts concerned that money worries will become the norm for people as more older people than ever pass their centenary birthday.

The Office for National Statistics data reveals that there are currently approximately 13,780 people who are 100-years-old or more.

An increase of over 10,000 over two decades compared to the figure of 3,040 recorded in 1983.    100

The number of people receiving their telegram from the Queen is expected to continue to rise, prompting the fear that people will need to work for much longer into their supposed retirement years, and save more money for retirement whilst working.

Advances in medicine, standards of living and better overall general health have contributed towards an ever-growing ageing population in the country.

In fact there are so many people reaching their century birthdays nowadays that people wonder if the Queen should wait until people reach their 105th or 110th for their prestigious telegram. In fact the telegram is now a card, and it is the Department of Work and Pensions responsibility for sending out the cards, not Buckingham Palace, which has had to take on extra staff to cope with the workload!

The ONS predicts that the number of people aged over 100 will increase tenfold over the next decade to 33,989 and then by around 2034 there will be over 80,000.

The UK ranks fairly highly on the list of countries whose residents enjoy longevity.

Japan ranks the highest in the charts for people aged 90 or over for every 100,000, with 1,266. After Japan, Western European countries fare well for the elderly.

Sweden had the most elderly residents aged 90 or over in Europe at 1,004 per every 100,000 and then France with 995.

Harsh winters and even harsher political regimes in former Eastern Block countries means that such places tend to have lower numbers of residents reaching their 90s, the lowest in Europe is Russia with just 212 per 100,000.

It’s has been estimated that there are still around 104,000 people still alive in the UK who were born during WW1 from 1914 to 1918, which means a sudden boom is expected of the next couple of years, after the war there was a baby boom so turning 100 could become something quite ordinary instead of unique with the next decade.

Couples retiring now are wealthier than ever before

Data released by the Institute of Fiscal Studies (IFS) shows that nearly half of couples recently retired are better off in retirement than when they were working.

According to a report by the IFS, UK retirees born in the 1940s have a better disposable income than they did in their working years, and more than enough money to fund their lifestyles.  nest egg

In fact almost half of couples questioned said they had a better income in retirement than they did working.

The study by the IFS looked at the retirement income of couples now compared to their earnings in the thirty years from 20-years-old to 50-years-old.

The findings showed that 80% of those born in the 40s had an retirement income at 65 worth around two-thirds of their average career earnings if they combined their private and state pensions.

Four in ten said were now enjoying higher incomes than their working life average earnings.

Pensioners generally by the age of 65 have grown up children who are no longer financially dependent on them, and have usually completely paid off their mortgages and no longer have to pay into a private or workplace pension which greatly frees up a large portion of money that would have been accounted for in their working lives.

In addition, housing wealth has meant that many 65-year-olds are considerably better off than they were when working, particularly those who first got onto the housing ladder in the 1970 and 1980s when houses were cheap.

The IFS report found that 92% of recently retired couples had an average surplus wealth, including property wealth, of £220,000 over and above their needs or around £7,000 a year – more than enough to enjoy a comfortable retirement.
When housing wealth was eliminated from the calculation there was still three quarters of couples who had more money than they needed to maintain their standard of living throughout retirement, with an average wealth surplus of £120,000.

The news is likely to add fuel to the fire of the argument that wealthier pensioners should not be given pensioners benefits such as the winter fuel allowance, free TV licences and bus passes and other perks.

Many of the people retiring now have been paying into the more generous final-salary pension schemes, compared with the majority of workers now paying into a defined contribution scheme. In addition the rapid rise of house prices over the past two decades has also ensure that many pensioners are now much more wealthy in their retirement than their parents.

More British Pensioners Filing for Bankruptcy now Than at Height of Recession

According to recent research by Moore Stephens, more over-65s declared themselves bankrupt in 2013 than at the height of the credit crunch and the situation looks set to continue.

Low incomes coupled with the increasing cost of living and easy to get credit are being blamed on the recent spate of pensioner bankruptcies.

Overall, the number of people becoming insolvent fell last year, but it seems that m0re pensioners than ever are starting to succumb to the financial strain.  uk-money

The accountancy company revealed that 5,672 pensioners declared themselves bankrupt in 2013 compared to 4,727 in 2009 – a 22% increase.

Throughout the UK, 100,389 people became insolvent last year, a 25% fall on the figure in 2009 of 134,052.

In 2009 pensioners made up just 3.6% of the total of insolvencies, compared to 6% now.

Moore Stephens said that pensioners in particularly had been hard hit by the recession, with low interest rates affecting their savings and their annuity rates, along with rising living costs stretching their money further than ever before.

Because many pensioners are on a fixed income it is harder for them to pay off debts incurred, particularly when it was so easy for them to procure the debts such as credit cards, bank loans and overdrafts prior to the start of the recession.

Whilst the economy is growing, those already retired are unlikely to be affected and will continue to struggle financially if they cannot bring in any extra income to help pay debts.

However, charities dealing with debt advice say that many pensioners could avoid bankruptcy if they looked at other options, including re-negotiating their payment plans with creditors or looking into equity release products to release vital funds that could pay off debts.

Pension Savers Face Large Fees to Access Their Pensions

Millions of retirees may have to rethink their pension plans when they realise their pension company could charge them up to 20% of their pot for accessing their nest egg.

From April 2015, pension savers over the age of 55 who have a defined contribution workplace pension can access their pension pots as they wish, rather than having to buy an annuity or drawdown product.   income drawdown

Whilst many will indeed be tempted by being able to get their hands on large sums of money rather than buy an annuity which will guarantee them an income for life, many will be left reeling when they find out how much their pension provider will charge them for the privilege.

Financial advisors are urging savers to go through their paperwork with a fine tooth comb, checking the small print for penalty charges that may occur if they choice to withdraw their pensions, with some companies charging as much as 20%.

Exit penalties are particularly prevalent on pension products sold in the 80s and 90s, with most of them being on defined contribution workplace pension along with private pensions for the self-employed.

The clauses were usually drawn up to deter savers from switching to a rival insurance companies to secure themselves a better pension deal further down the line.

Not only do savers need to be aware of the tax implications of accessing their pensions instead of buying an annuity, they also now need to be aware of how much of their pot it will cost them to do so.

Many insurance companies will also charge hefty fees for taking your pension before the retirement date logged in your policy documents, with most documents stating retirement ages of 60 or 65, and some as high as 70, leaving many who were planning to retire early because of the new pension freedom changes having to rethink their plans.

Whilst charges may vary hugely between companies and differing policies, charges start at as little as 2-3% but can go up to 20% on older policies which were sold before the insurance companies were fully computerised.

The exit charges will be even more of a blow to those who hold multiple pension policies because they have changed companies several times over their careers as potentially each pot will have an exit fee attached to it.

Withdrawing From Pension Pots Could Lead to Self-Assessment Tax Forms

Pensioners looking to take advantage of the new pension freedom reforms coming into effect next April will find themselves having to complete the complicated self-assessment forms,

In addition, many will face tax bills if they go over their personal allowance. piggy-bank

Experts in the field are concerned that many newly retired savers will not seek independent advice before deciding what to do with their pension pots, with many choosing to withdraw large amounts of money without realising they will be subjected to tax if their income exceeds £10,000 per annum.

As things stand, once a saver takes money out of their pension they would be liable to income tax (at a level depending on how much money they had withdrawn and other additional forms of income they may be receiving), and the money could not be returned to the pension scheme once withdrawn in an effort to reduce the tax bill.

There are approximately ten million people in the UK who have to fill out self-assessment forms each year – most of which are currently self-employed or people on higher rate tax.

This figure is set to rise if many pensioners choose to tax out lump sums from their pension pots.

Many pensioners will be receiving their retirement income from two or three different source – mainly the state pension and their personal or workplace pension and then any other investments or earnings, all with separate tax codes.

The self-assessment forms are acknowledges as being complicated and long-winded with many filling in their forms incorrectly each year.

Pensioners who don’t complete their forms correctly could find themselves landed with a large tax bill, or have any money owed taken from their personal allowance the following year (or years) to make up the difference. This could be troublesome for those who don’t have a large pension pot and are on a tight budget.

In addition, those who drawdown money from their pension pots which causes them to exceed their personal allowance could suddenly find themselves on a higher tax code.

Those who choose to keep their pension invested in the scheme but withdraw differing amount each year are certain to have to complete a self-assessment form and having to pay the tax owed in one lump sum rather than drawn out across the entire year.

As always, experts advise that anyone choosing to withdraw money from their pension pot seeks guidance from an independent advisor who will ensure they understand the tax implications of their decisions.

100K more over-60s in work since 2011

Over the past two years the older generation still working has risen by over 100,000. In other good news, these so-called ‘silver workers’ are being rewarded financially as their wages have risen more than any other age group over the same period.

According to data published by the Office for National Statistics (ONS) in conjunction with the Prudential, between 2011 and 2013, the average income for workers aged 60 and over increased by 6.1% to £17,250, compared to an average of 3.8% for other age brackets.

In addition, during this time an extra 100,000 older workers were in employment with a large section of these being in senior positions.

Roles in senior management rose most in older workers, as an extra 25% more joined the ranks in 2013 than in 2011 and earned them an extra £1,200 as their pay increased from an average of £24,000 to £25,200.

Whilst many over-60s workers continue to work due to insufficient pension savings, many are choosing to continue to work because they’d prefer not to retire. Now that companies are not allowed to force people to retire once they reach state pension age, many workers are enjoying the challenges of employment well into their late 60s and even 70s.

Employers are recognising that older people have a lot to offer the workplace, with experience and the ability to guide their younger counterparts. They are often seen as being more reliable and less likely to jump ship.

Women aged 60 and over have seen the highest wages rises, with a hefty average increase of 11.4%, compared to 4.2% for men aged over-60. However, this increase in salary could also be down to working more hours rather than getting paid more per hour.

Some people are concerned that the increasing number of ‘silver workers’ is having a knock on effect on the salary increases of younger workers, along with holding back their careers as they unable to climb the ladder.

Academic Study Shows Annuities Still Offer Good Value for Money

A study conducted by the Open University has found that contrary to popular belief, annuity products offer ‘fair’ value for money for those looking to guarantee their income in retirement.

Whilst annuities have suffered by way of reduced interest rates over the past 25 years and along with a general increased cost of living, have not given customers the same kind of returns they did in the 90s, they still represent good value.

In fact, one of the major reasons that annuities now create less retirement income than they did twenty years ago is because we are all living much longer, so therefore the same amount of money has to go further than it did two decades ago.  piggy-bank

The Open University study found that 97% of the reduction in retirement income from an annuity was down to increased life expectancy.

The report said that annuities should be looked at as an insurance against living longer than your savings or other investments will last.

A spokesperson for the Open University said that drops in annuity rates coupled with living longer doesn’t mean that they offer poor value for money, and stressed that they should still play a vital role in people retirement plans.

However, she was keen to point out that there can be up to 25% difference in annuity rates on similar products, so it was vital that anyone planning to buy an annuity really needs to shop around and if possible, seek the guidance of an independent financial advisor.

Many annuity customers make the mistake of taking the offer from their pension provider, without bothering to check if they could get a better product elsewhere.

In addition, many don’t realise that they need to declare all their health issues as this may mean they are eligible for an enhanced annuity if they are likely to die earlier than expected from unhealthy life choices or medical complaints, which offer considerably better rates than normal annuity products.

As from April 2015, anyone with a defined contribution pension can access their entire pension pot without having to buy an annuity product.

However, after receiving the 25% tax-free lump sum, any futher drawings from their pension will be subject to income tax.

Many people may find that they want to spend or invest some of their pension cash from next year, but also use part of their pension pot to buy annuity so that they do have some guaranteed retirement income for life.

Most annuity providers are coming up with newer, more flexible products that will suit a variety of needs.

Pensioner incomes now higher than working households

IFS data shows that pensioners have a bigger income than working families.

The Institute for Fiscal Studies has found that pensioner households now have bigger incomes than those of working age.

The gap between young and old when it comes to income is becoming ever wider, as the report details that a quarter of young adults haven’t yet got onto the housing ladder and still live with their parents.

The IFS report found that pensioner households had a 5% higher income than working households, whereas people aged between 22 and 30 have seen their incomes shrink by 13% since the start of the financial crisis.

Unsurprisingly given the increase in house prices along with the lack of wage rises over the past few years, the number of under-30s owning their own homes has fallen sharply over the decades, with 45% of young people owing their own home in the 1960s to just 13% in 2012-2013. The IFS report notes that renting for young people will become the norm and many of them will never be able to get on the housing ladder in their lifetimes.

A spokesperson for the IFS said that there has been a large shift in direction when it comes to the incomes of the young and old, which has been accelerated by the recession. Even though younger people had gained through lower interest rates and lowered rent prices, they had been badly hit by unemployment and lower wages.

Pensioners have gained overall since before the recession. In 1992 they had an income that was 20% less than working households and was an average of £256 a week.

Fast forward 12 years and they now enjoy a higher income and the average income for pensioner households is now £388 a week.

The report also noted that there wasn’t a north-south divide with falls in income for working households, although the level of losses differed greatly between different areas ranging from 8% drop in Northern Ireland to a 2% fall in the East Midlands.

Average living cost for over-65s is £10,387

According to recently published research, the average pensioner spends around £10,000 a year in living costs.

Key Retirement Solutions have found that the cost of basic necessities is £10,387 a year for the over-65s.

This includes expenses such as food – which works out at an average of £1,563 a year and housing and utility costs come in at an average of £1,485. piggy-bank

The amount needed to cover the bare essentials is significantly less than the state pension would provide on its own, so the over-65s have to fund their lifestyle through private pensions and savings.

Unsurprisingly, those living in the South East of the country have the highest cost of living, typically spending almost £12,000 a year. Those in London spend slightly less at £11,322 and the over-65s in the East spend an average of £11,144 a year.

Those who live in Wales have the smallest cost of living expenses at £8,829.

The data highlights the importance of carefully planning for your retirement future and more importantly, not to underestimate how much your standard of living will cost you in later life.

The average annual spend on basic necessities doesn’t include luxuries such as holidays or trips to the theatre, so if you want to live a full and rewarding retirement you need to ensure you put enough away to generate a healthy retirement income.

The Office for National Statistics (ONS) released data last week that showed company pensions accounted for more than a quarter of the income for the over-65s households, with other sources of income coming from investments, personal pensions and earnings post retirement.

Just Retirement completed a survey which found that 41% of people were planning to access their pension cash after next April, with many choosing to pay off debts such as loans and mortgages.

16% said that would like to invest the money, prompting the company urged people to ensure that they searched for the best interest rates in savings or Isa accounts rather than transferring their cash into a low return account if they wanted to be able to access their money easily. Almost three quarters of those questions admitted that they didn’t want to invest their money in what they saw as high risk investments such as shares or bonds.

Annuity companies are bringing out a range of products that will offer both short and medium term solutions, whilst offering a guaranteed income. People will also be able to use part of their pension to buy an annuity, freeing them up to spend or invest the rest as they wish.

Female workers aged over 65 set to surpass male workers of the same age

According to research by the Institute for Fiscal Studies (IFS), women are set to take over men when it comes to working in later life.

As things stand, there are already more women still working in their late sixties than for the past 40 years and the trend is set to continue and rise with the IFS suggesting that more women in their late-60s will be working than men by 2020.

The rise in women working much later is accredited to better health, the increasing state pension age, which has risen substantially for women and the lack of enough pension funds to provide a comfortable retirement.

The research looks at people aged 65 and above in England and their demographics and the financial factors that affect them from now until 2023.

The IFS estimates that by 2023 the percentage of women in their late sixties still working could be as high as 37%, compared to just 16% in 2011 and only 8% in 2000. retirement

The proportion of men in their late 60s also continuing to work is also set to rise over the next few years although not at such an accelerated rate, going from 29% to 33%.

The Office for National Statistics backs up this trend with their report published earlier this month. They found that between February and April this year, around 435,000 women over the age of 65 were in employment—an increase of 12% on the same time period in 2013.

In the same time frame, there were approximately 664,000 still working past the state retirement age, jumping 8% from last year.

The IFS report also backs up a recent announcement by the Government that those who work longer will have more money, larger pension pots and be less likely to suffer from boredom and loneliness.

In addition, those in their late 60s and early 70s can expect their net incomes to increase by around 3% each year until 2023, compared to an increase of 1.6% for those aged over 75.

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