The UK is getting older… at least according to official statistics.
The Office for National Statistics has reported that by 2037, the number of people aged over 80 years old in the UK is set to double. That’s around 6million over-80s: almost 10% of the predicted population of 68 million.
To counter this, the state pension age is also rising, with the government now opting to review the age at which you can officially receive the state pension every 5 years. While it’s currently on track to hit 68 years of age, eventually it could hit 70 for those born after 1981, 71 for those born after ’88 and 72 for those born later than 1995.
In this confusing era of income drawdown, unstable annuity rates and working later in life, there are still some obvious, and not so obvious financial benefits to living longer.
More time to invest in your pension
New figures have revealed that working just a few years past the official state pension age can massively boost your weekly retirement income.
Even for those with the lowest 25% of valued pension pots, continuing to work for an additional 5 years could boost their weekly income by a massive 33 per cent. Continue working for three years for a 20 per cent boost, and one extra year for a six per cent rise.
As soon as you reach state pension age, you’ll also cease paying national insurance, so your monthly take-home wage will increase too.
There’s also benefits for deferring your state pension payments too. If you can live without them for a few years, you can boost the payments for life. While there are pros and cons to this (the main one being, it may take time to ‘break even’ on the state payments you missed out on), it may feel more beneficial to receive larger payments from later in life, than small payments from an earlier date.
Better chance of being debt free
There are a large number of pensioners in the UK who are unfortunately in debt. At a time of your life when you should be enjoying your freedom, you are a slave to a creditor, with a fifth of over-65s having borrowed cash to meet day-to-day living expenses.
In the report published by Key Retirement Solutions, only 43 per cent of over-55s did not owe money on any form of credit.
By continuing to work later in life, and past your official state pension age, you can focus on clearing debts. Once you retire, you will hopefully be debt-free and can enjoy the pension savings you have accrued without worries about paying off lingering credit.
You’ll help to boost the economy
A report from the UCL School of Pharmacy has declared that the ageing population are a benefit to the economy, as opposed to being a burden.
Partly thanks to the pharmaceutical revolution of 1950-2000, as people live longer they stay healthier, at any given age – providing a boost to the economy.
The boosted economy can lead to higher incomes, lower unemployment and improved public services across the board.
You may save on insurance
While you could end up paying higher rates on life insurance policies as you get older, there is other essential insurance that could see rates fall.
Car insurance is one such matter, with over 50’s being favoured over younger drivers. Statistics show that experienced drivers are less likely to have an accident, which of course typically means a discount to your car insurance premiums.
Older people are apparently more mindful homeowners, and are less likely to claim for smaller emergencies on home insurance, which again means lower premiums for people within that age bracket.
There may even be insurers who specialise in cover for the over 50s, so forget the loyalty you have to your current provider and see if there’s a better deal elsewhere.
There are grants and benefits available
There are all sorts of extra financial benefits available for those later in life – aimed at helping those on retirement incomes. As well as free bus passes for senior citizens, there’s also discounts on rail fare and coach tickets too.
You’ll get free prescriptions after a certain age too: extremely helpful as health does tend to deteriorate with age.
For those one a low retirement income, your pension could be subsidised by Pension Credit. Guarantee Credit is for those over 60, and guarantees a weekly income of at least £148.35 for single people and £226.50 per week for those with a partner.
Savings Credit may also be rewarded to those over 65s who have saver for retirement – up to £16.50 if you are single or £20.70 per week if you have a partner.
Find out if you are eligible at the Government’s official website.
You may also be eligible for Council Tax and Housing benefit from your local council, depending on your income, and if you’re eligible for certain benefits your loved ones could benefit from help with funeral payments too.
There is also the Winter Fuel Allowance, a tax-free grant to help with heating bills each winter so ensure you’ve applied for that as almost everybody over 60 is eligible.
Living older doesn’t have to mean working late and eating into your retirement if you don’t want it to. But as you can see, there are some real financial benefits to getting older as well as a number of processes in place to help you subsides your retirement income once you do finally decide to finish work.
Ryan Smith is part of the content development team at Compare Annuity, working with a carefully selected network of annuity specialists offering retirees free, no-obligation quotes and advice on annuities.