Pensioners may never have had it so good – but future generations may not be so lucky, according to new research.
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While retired households are less likely than ever to be stuck on a low pension income, working age families are more likely to face a much bleaker financial future.
Pension income has increased over the past 15 years, pulling pensioners out of poverty in their old age, says think-tank the International Longevity Centre.
Around the turn of the century, retirement age families were more likely to have low incomes than working age families, but since then, the study shows the trend has reversed.
Instead, working families with children suffer relative poverty.
The report also points out that the number of pension savers has plunged from 5.5 million to 2.5 million and the proportion of 18 to 24 year olds who are economically inactive is higher than the 50 to 64 year old age group.
Many retirement age households also have money tied up in the equity of their homes to draw on, but the number of households renting privately has soared by almost two-thirds since 2001, while the average age of a first time buyer purchasing a home without financial help from their family has risen to 33 years old.
All this, explains the International Longevity Centre means upcoming generations have less money to save for their retirement.
Spokesman Ben Franklin said: “Big strides have been made to reduce pensioner poverty over the past 15 years but other generations are likely to be less lucky. High house prices and low savings will have a big impact on the financial status of the younger generations when they reach retirement.”
Working until age 70
The report echoes research by The Office for Budget Responsibility which predicts the government will have to impose higher taxes or more spending cuts to fund the needs of the country’s aging population.
The alternative is forcing people to work until they are at least 70 years old.
The problem, says the report, is the government has no plan to deal with the increasing costs of the call older people have on health care, pensions and social spending.
“The logical way forward is to have a larger proportion of the population working and paying taxes to fund the needs of the elderly,” said the report. “That means working longer and possibly more spending cuts.”
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