LONGEVITY Population explosion
The UK lags Europe in its readiness for an ageing population, explains Patrick Connolly, Chase de Vere
- increasing longevity is creating huge challenges for individuals and for society as a whole
- research shows that people view this negatively, are concerned about the country’s ability to cope and are not doing enough to prepare for later life themselves, as we lag behind our European counterparts
- if we want to enjoy the benefits of an extended life, we need to plan ahead; while it is imperative to keep both physically and mentally active, we should also be planning financially to ensure that we live the life we want as we get older.
We are facing a retirement time bomb where people are living for longer, but are not making adequate savings or investments to support themselves financially in retirement. Unless action is taken, the only possible outcomes are that more people will have to retire later, have a poorer standard of living in retirement or become a burden on the state.
The research we have conducted looks at the attitudes to longevity of one thousand UK citizens, their aspirations and concerns about living longer and what steps they are taking to address this. We have compared the results with similar research carried out by The Economist Intelligence Unit on behalf of Swiss Life, the parent company of Chase de Vere, in Germany, France, Switzerland and Austria.
How is increasing longevity viewed in your country?
On balance, people think that increasing longevity is a problem rather than a benefit to society. This view is strongest amongst older people.
In the UK, 44% of under-65s see people living for longer as a problem, while 31% see it as a benefit. For those aged over 65, 50% see increasing longevity as a problem, while only 28% say it is a benefit (Table 1).
France is the only country surveyed which perceived increasing longevity as a benefit for their society.
Which challenges of an ageing population is your country not well prepared for?
The standout figures relate to the concern that those in the UK feel about healthcare systems and social services. The same level of concern is not evident in Europe.
With the exception of higher pension costs, older people are more concerned than younger people about their country’s ability to cope. In the pension category, younger people, those who are currently paying for today’s state pensions, were more concerned than older people, who are likely to be in receipt of state pensions.
This divergence between older and younger people is also reflected in the scores relating to the need for social change in the attitudes toward elderly people, which were much higher in the UK than in Europe (Table 2).
What is most important for an acceptable amount of control over the kind of life you desire?
By far the most important factors are physical and mental health.
The biggest divergence between the UK and Europe arises when looking at the economic resources needed for quality of life in retirement. In the UK, only 30% of those under 65 highlighted this as important, compared with 58% in Europe.
This lack of emphasis on economic resources is likely to be directly correlated to the importance people place on savings and planning for retirement, which is reflected in our low household savings ratio and is likely to exacerbate our country’s problems in the future, as an increasing number of people are not financially independent in their old age.
The importance of economic resources is highlighted again when looking at the UK in comparison with individual countries. In the UK, only 31% of total respondents highlighted this as important, compared with 54% in Germany, 51% in France, 45% in Switzerland and 58% in Austria (Table 3).
What most accurately describes your thoughts about employment and retirement?
Having identified that relatively few people aged under 65 in the UK regard having economic resources as an important factor for having a good quality of life in old age, it is interesting that 39% in this age category want to retire when they are as young as possible and relatively few want to continue working past state pension age. This is a clear disconnect.
There is some commonality of results between the respondents in the UK and in Europe. Generally, people who are younger have aspirations to retire earlier than those who are older (Table 4).
What do you most look forward to or currently enjoy about retirement?
Those in the UK put the major focus on having more control of their time in retirement.
The European respondents were more enthusiastic about every single one of the activity options, including engaging in leisure activities, travelling, spending more time with friends and family, and volunteering. It seems as if the UK respondents want more control over their time but have given less thought to what they will do, or are doing, with it.
A worrying number is that only 19% of UK respondents aged under 65 were looking forward to being financially independent in retirement. This could be because they do not see it as a priority, do not believe it is an achievable goal or simply are not engaged with pensions and their retirement planning (Table 5).
What steps have you taken, or are taking, to live a longer life of your own choosing?
What stands out is that the European respondents are more focused on planning for retirement and for living a longer life than those in the UK. In every single category, the European respondents have been more proactive, with the exception of those in the UK aged over 65 where more have reduced their expenses; this may have been out of necessity (Table 6).
The overall picture
We end up with a rather depressing picture in which people living longer is viewed negatively by society; where we seem to desire a long retirement, but are not taking the steps needed to retire when we want; and without any real plans to enjoy our retirement when we get there. In the UK, it also seems that we are some way behind our European counterparts.
The message is clear. We are likely to live for longer and so if we want to enjoy the benefits of an extended life we need to plan ahead. While it is imperative to keep both physically and mentally active, we should also be planning financially to ensure that we are more able to retire on our own terms and to live the life we want as we get older.