New research from Independent Age, the national charity supporting older people in financial hardship, projects a dramatic surge in poverty in later life by 2040 if current trends and policies remain the same. 

The report, “Keys to the future: Projecting housing tenure and poverty rates in later life”, contains new research commissioned by Independent Age and carried out by the UK Collaborative Centre for Housing Evidence (CaCHE), a consortium of housing policy institutions.

It projects that, if poverty levels among people aged 65+ continue to change in line with year-on-year trends since 2010:

• poverty among older people will increase from 17% to 23%. This would mean that the number of people living in poverty in later life across the UK could increase from 2.1 million in 2022 to 3.9 million people by 2040;
• poverty will increase more for older women than older men, going from 20% of older women currently in poverty to a forecast 26%. Reasons for this could include women having less capacity to save due to challenges like the Gender Pay Gap or time out of work due to caring responsibilities;
• poverty levels among older people with a disability will increase significantly from 18% to 29% which compares to a projected increase in poverty in the non-disabled older population from 17% to 19%. Those with disabilities often face additional costs to manage their conditions, resulting in fewer opportunities to save.

Independent Age, which has a national helpline and advice service that regularly speaks to people living on a low income in later life, says that financial hardship is already causing many older people to make cutbacks that are dangerous to their wellbeing.

Moreover, poverty has been linked to a shortened life expectancy, a greater likelihood of poor physical and mental health, and increased stress and anxiety. It also has a societal cost, with the choices older people in financial hardship are forced to make often impacting their well-being, leading to increased health and social care costs.

Commenting on the findings, Joanna Elson CBE, Chief Executive of Independent Age said: “Too many people currently experience financial hardship in older age, and the rocketing levels of poverty in later life that this research projects are bleak. It must be a wake-up call for decision makers across the UK.  

“Every day, we speak to some of the almost two million older people already in financial hardship who are skipping meals, washing in cold water or not using the lights in the evening, all to save money. It’s a horrible situation, but it’s the reality for one in six older people. This is a scandal, and this new research shows it could get even worse, rising to affect almost one in four. 

“This report paints a dreadful picture of what could happen if no action is taken. Is this really what we want our future to look like? With collective action from politicians, businesses, regulators, housing providers, charities and others, we can ensure the voices of current and future generations of older people are heard, that they live in safe, affordable and secure homes and have the income they need to live a dignified and fulfilling life.” 

Challenges for older renters

Independent Age says that older renters are at higher risk of being in poverty in later life, and that this research projects the situation could get worse:

• the highest growth of poverty in older age will be among private renters.
• almost one quarter (24%) of all older people (65 years+) will be living in rented accommodation.
• the proportion of people aged 65+ living in the private rented sector will treble from 4% to 13%, alongside which there will be decline in the proportion of people aged 65+ living in homes they own or in social renting tenures.
• poverty levels will be 61% for older private renters with a disability and 76% for older social renters with a disability.
• 14% of all women will live in the private rented sector and more than half of these (54%) will be in poverty.

Independent Age says that unaffordability is a major issue for older private renters. Although Local Housing Allowance (LHA) was introduced to cover the cheapest 30% of rental properties in the local area, this was frozen for a long time at 2020 levels, and only recently uprated. However, analysis shows that, across Britain, only 8.5% of the market is affordable on Housing Benefit. There is no guarantee that the next UK Government will decide to uprate LHA next year. According to the ONS, UK rent has risen 9.2% in the last year.  

Joana Elson CBE continued: “Older private renters are already at huge risk of being in poverty, often because their fixed income is eaten up by paying rent. Unless something is done, this research shows their number could increase even further. 

“With one in five single pensioners and 13% of all pensioners relying solely on the State Pension and financial entitlements, it’s really important that the next UK Government makes sure that those on a low income receive the money they should be to ensure they can afford the essentials. A good home should not be a luxury, and we all want to live somewhere safe, secure and affordable in later life.”

Recommendations

To prevent poverty in later life from rising to the levels projected by this new research, Independent Age recommends:

• The next UK Government conduct a cross-party review to agree what level of income is needed in retirement to avoid poverty.
• The future UK Government has a significant and strategic focus on improving uptake of all social security entitlements for older people, including Pension Credit, Housing Benefit, Attendance Allowance and Council Tax Reduction, with a clear strategy and improved use of data to ensure that all older people receive the money and discounts they are entitled to.
• The next UK Government ensures renters on a low income across the UK are supported to pay their rent through Local Housing Allowance. For renters in England the next UK Government should also reform the private rental sector so no one faces no fault evictions or financial discrimination and everyone has a decent home and longer notice periods. In addition, the Scottish Government and Parliament should progress the Housing (Scotland) Bill to create a new system of rent controls, strengthen tenants’ rights and improve support for people facing eviction and homelessness.
• Political parties across the nations must commit to making a significant and sustained investment in social housing and in updating, insulating and modernising homes.
• The inconsistent financial support provided within, and between, utility sectors is tackled by individual utility companies ensuring they have social tariffs and discounts to support those on low income, and longer term the next UK Government introduces national social tariffs for both energy (across the UK) and water (in England and Wales).
• Future and existing national and local governments and utility providers more proactively promote social tariffs and other support targeting areas of deprivation, and all eligible groups, including older people who receive Pension Credit.