Many over-50s are under financial strain across the country but Londoners are among the most vulnerable, new research claims.
The home ownership rate for older people living in the capital, where property prices are sky high, is by far the lowest in the UK at 55 per cent.
This is a key indicator of retirement poverty, because it means people still face housing costs in old age.
Yorkshire and Humberside has the highest rate of home ownership among over-50s at 77 per cent, followed by Northern Ireland at 76 per cent – and in no other part of the country is it below 60 per cent.
London is famously home to very wealthy people, but it scores badly in several measures of likely poverty in old age, according to the study by SunLife.
Just over half of London residents aged over 50 are in debt, only slightly lagging the South East at 52 per cent and Scotland at 53 per cent.
SunLife boss Mark Screeton: There is a clear ‘postcode lottery’ when it comes to retirement
They are also among the most likely to fear running out of money in retirement at 38 per cent, again only slightly lagging their counterparts in the South East and Scotland.
Average income before tax is highest in these same three regions, at £31,000-plus – but this will be outweighed by the higher cost of living.
‘In London particularly there seems to be a “perfect storm” of low homeownership, high debt, below-average income, and financial anxiety, all at a time in life when many would hope to feel more secure,’ says SunLife chief executive Mark Screeton.
His firm surveyed more than 2,000 people over 50 about their financial situation, their history of big purchases and what is on their wishlist to buy in retirement.
Last week, an influential industry survey showed the cost of a comfortable retirement now tops £60,000 a year for a couple, and is £43,900 for an individual.
A couple aiming for a ‘moderate’ lifestyle, which includes enjoying meals out and trips abroad, now need to find £43,900 annually, while an individual – who lives on one state pension, not two – requires £31,700.
However, lower energy prices mean the cost of a minimum lifestyle has fallen 4 per cent for a couple to £21,600 and 7 per cent for an individual to £13,400.
The Pension and Lifetime Savings Association figures do not include income tax, housing costs if you are still paying a mortgage or rent, and potentially care costs in later life.
SunLife found the cost of living is the number one financial concern among over-50s.
In Northern Ireland 74 per cent worry about it, in Scotland 71 per cent, and in the East Midlands 68 per cent – though in London 56 per cent said it was a concern.
Overall, those surveyed had lived in their homes 22 years on average, and in terms of home improvements a new kitchen was number one on the wish list for men, while women would rather have new carpets and floors.
Screeton says: ‘Our research shows a clear “postcode lottery” when it comes to retirement, where people’s ability to enjoy later life appears to be impacted by where they live.
‘Whether it is mortgage repayments dragging into retirement or higher levels of consumer debt, older people in some areas are facing greater financial concerns than others.’
How to sort out your pension if you fear it’s falling short
1) If you are worried about whether you will have saved enough, investigate your existing pensions. Broadly speaking, you need to ask schemes the following questions.
– The current fund value.
– The current transfer value – because there might be a penalty to move.
– Whether the pension is in a final salary or defined contribution scheme. Defined contribution pensions take contributions from both employer and employee and invest them to provide a pot of money at retirement.
Unless you work in the public sector, they have now mostly replaced more generous gold-plated defined benefit – career average or final salary – pensions, which provide a guaranteed income after retirement until you die.
Defined contribution pensions are stingier and savers bear the investment risk, rather than employers.
– If there are any guarantees – for instance, a guaranteed annuity rate – and if you would lose them if you moved the fund.
– The pension projection at retirement age. You can use a pension calculator to see if you will have enough – these are widely available online.
2) You should add the forecast figures to what you anticipate getting in state pension, which is currently £230.25 a week or around £12,000 a year if you qualify for the full new rate. Get a state pension forecast here.
3) If you are tempted to merge your old pensions, read our guide first to ensure you won’t be penalised.
4) If you have lost track of old pots, the Government’s free pension tracing service is here.
Take care if you do an online search for the Pension Tracing Service as many companies using similar names will pop up in the results.
These will also offer to look for your pension, but try to charge or flog you other services, and could be fraudulent.
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