You might be forgiven for thinking that crime or health would be the greatest concerns for older generations but new research shows that there are more pressing concerns.
Research by Saga has shown that inflation and the financial future of their children are the issues causing the UK’s 21 million over 50’s sleepless nights.
The latest Saga Index, which tracks the standard of living, happiness and health of people over the age of 50, has found that older generations are worried about inflation. The survey of 10,000 people found that the average prediction for the rate of inflation was 5.2%, although some people surveyed thought it could rise as high as 6%.
The high rate of inflation over the past year or so has caused a number of problems for the UK’s older generations.
High inflation and all time low interest rates have hit the UK’s savers hard. Even using the best savings interest rates it is not currently possible for a tax payer to get a rate of return, net of tax, equal to inflation, meaning that the buying power of savings is being hit. Many retired people rely on the interest from their savings to help make ends meet, meaning they are not only eating into their capital, as interest rates fall, but inflation is also eroding the buying power their savings.
Many retired people are also on fixed incomes. Whilst the state pension is guaranteed to rise each year, most Annuities, which is the most popular option for turning a pension fund into income, are arranged on a level basis, meaning that the income is fixed for life and will be eroded by inflation. The current high levels of inflation are eroding fixed incomes more quickly that was previously the case.
The problem of high inflation is compounded for those approaching retirement by all time low Annuity rates. An Annuity rates comparison shows that over the past five months Annuity rates have fallen by around 10% as a pension Annuity calculator or will confirm.
High inflation is also causing many over 50’s to cut back on spending, with 19% reducing their essential spending and in particular cutting back on the costs of heating, which have soared over the past year.
Saga also revealed that despite their own financial troubles one in three of the UK’s over 50’s are helping their children financially.
The children of the over 50’s are suffering significant financial hardship as a result of the recession and credit crunch with many concerned about job security, the housing market, their ability to get a mortgage and the rising cost of further education; not to mention changes to pensions and the state pension age.
The ‘generous generation’
Dr. Ros Altmann, Director-General of Saga, commented: “After falling consistently throughout 2011, I hope that the first signs of stabilisation in our Quality of Life index will turn into a solid improvement in 2012. It is also heart-warming how much the over 50s are helping others, despite high inflation, by supporting family and charity. These really are generous generations.”