How the cost of living crisis is affecting those approaching retirement | UK news

Maintenance costs

There has been an increase in the number of people approaching the retirement age of 66 using food banks and other forms of financial support (Image: Getty)

“I should be working less and thinking about retiring, but I can’t afford to stop working.”

These are the words of Mandy*, a 60-year-old who is struggling with rising expenses due to the cost of living crisis.

Mandy, who lives in the south of England, has three part-time jobs and her income is supplemented by Universal Credit. Due to health problems, he is no longer able to work.

Despite living frugal and even being referred to a local food bank, she was over £500 in debt with her energy supplier over the winter because of the cost of heating her home.

With the threat of bailiffs knocking on her door, Mandy was only able to repay the debt after one of her adult children, who had recently been promoted, gave her money.

Mandy said: “I’m getting older now, I should be running out but instead I took two extra jobs in the last year.

“I was ashamed to admit how bad the situation was. It is the mother’s job to look after the children, not the other way around.”

The number of people approaching the state retirement age of 66 using food banks and other forms of financial support has steadily increased since the first coronavirus lockdown in 2020, and has increased sharply since the cost of living crisis began.

Stressed Hispanic couple paying bills on laptop

There has been a big increase in people asking if they can withdraw their pension early (Image: Getty Images)

Of those aged 45-64 supported by Citizens Advice in the last quarter, more than half – 55% – had higher essential expenses such as rent and energy bills than their income.

This compares to 41% in the same age group in January-March 2020, the highest since registration began in April-June 2019.

In February, 2,665 people aged 55-64 were referred to food banks – the highest number since 2019.

And 2,452 people aged 55-64 received charity support in February, bringing it to a peak of 2,339 in March 2022.

Pension calculation concept, old hands counting finances on home calculator,

For many, their income simply does not cover essential expenses such as rent and bills (Image: Getty Images/iStockPhoto)

With retirement approaching, there has been a significant increase in the number of older people questioning whether they should retire early.

A study by Lottie, a retirement comparison website and advice service, found that people searched the internet for ‘can I withdraw my pension early from my workplace?’. increased by 2850% in the last 12 months.

Will Donnelly, co-founder of Lottie, says withdrawing small amounts from your retirement pot can help you stay afloat – but says you should seek financial advice before making any decisions.

Maintenance costs

“I was ashamed to admit how bad the situation was. It is the mother’s job to look after the children, not the other way around.” (Photo: Getty Images)

He explained: “It is worrying that older people and those in a more socially disadvantaged position are feeling the effects of the cost of living crisis – especially those approaching the end of their working lives and struggling to financially plan their retirement and future years.

“Recently, we have seen a sharp increase in the number of workers looking to retire early. After the recent pension reforms, adults aged 55 and over can withdraw money from their private or occupational savings – and up to 25% can be withdrawn tax-free.

“While accessing a tax-free lump sum in the event of a cost-of-living crisis may seem like the ideal solution to combat the rising cost of living, it is important to consider all options.

“Regular withdrawals of large amounts can put you in a higher tax bracket, especially if you’re still working and earning, which means you could be worse off than before.

“However, supplementing the salary with a small amount of pension savings each month can be a lifeline for some older people who are struggling with the rising cost of living.”

Retirement planning to avoid poverty in retirement

Some people are ‘not retiring’ and are returning to work to help supplement their pensions (Image: Getty Images)

In recent months, the number of people deciding to work longer or to “retire” and return to work has increased.

Julia*, 65, has returned to work after retiring from the NHS.

She said: “I decided to retire due to mismanagement and wanting to work fewer hours. I saw an advertisement for my ideal job, there were more hours than I wanted, but there was no choice – I had to top up my pension.”

Shot of an elderly man looking stressed doing household finances on a laptop in the kitchen

Many people are hesitant to apply for benefits (Image: Getty Images)

Many people approaching retirement age may not realize that some benefits may be available to them.

Mandy’s benefits are paid directly to her landlord in the form of rent and she is claiming Personal Independence Payments with the support of the Job Centre.

She said, “I didn’t mean to be a scoundrel, but I’ve worked and paid taxes all my life, so I need support.”

Citizens Against Poverty (CAP), a charity that supports people in debt, says it is now helping thousands of people who are dealing with the cost of living crisis.

Figures from their latest research showed that 11% of over 55s did not use heating daily during the cost of living crisis, 3% skipped meals daily and 64% expect the cost of bills and essentials to be a significant burden for their finances this year.

Anna* is a pensioner who has become debt free thanks to CAP support, but says she is at risk of getting into debt again due to rising costs.

She explained: “I worked until I was 75, but now I’m dealing with a life with a pension that’s too small to live on.

“10 pounds a week. This is all I have left after paying the bills.

“I need to buy food so I go to Iceland and buy tinned tomatoes, some bread for the freezer, some plain pasta, food for my dog ​​and maybe if I’m lucky some chicken at the market but then £10 is gone.

Maintenance costs

Photographer: Tetra Images Provider: Getty Images/Tetra images RF Credit: Tetra images RF (Photo: Getty Images/Tetra images RF)

This is not life. It’s not existence. I have to limit everything that affects my mental and physical health.

“Current reality makes old people die early.”

Gareth McNab, director of external affairs for the charity, said: “My advice to anyone approaching retirement age or already retired who is struggling to pay bills and essentials is to make sure they receive all income, to which he is entitled – A great calculator of entitlement to free benefits is available on our website.

“If you’ve had a decline in income, or are expecting one after retirement, there are plenty of free budgeting courses available to help you adjust to your new circumstances.

“CAP runs free budget groups in local churches dedicated to helping people stay out of debt. More information can be found on our website.

“Finally, if you are now in serious debt due to rising costs and it continues to rise, seek free debt advice from a charity such as CAP so you can face the problem and work with our experts to find a solution.”

*Names and identification details have been changed.

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