After speaking at a recent ILC-UK event as part of its ‘Sustainable Older Society’ programme, I was struck by the paradox that if we want to have a sustainable retirement income, many of the steps we need to take are not necessarily about income.
Yes, having a pension, savings, a house and/or other assets are important, but so too is the extent to which you are able to continue to work and whether you can tap into the support of a strong social network.
If you have all these resources – health, wealth and social support – you’ll probably be OK. But like a three-legged stool, things get a bit wobbly if one of the legs falls off.
Recent research by Age UK, as part of its Financial Services Commission, looked at the generation coming up to retirement and found that not only are the non-financial aspects of retirement planning highly significant – for example even a moderately severe disability saw a significant increase in spending needs – but around 20 per cent of that age group showed very low readiness for ageing.
Action across the piece
At Age UK we spend a lot of time working on private pensions, and we are very encouraged that so far the new system of automatic enrolment into workplace pensions has got off to a good start. But we also try to highlight ways in which the non-financial aspects of life can help to resolve the income paradox, for example:
- Funding the care system sufficiently to reduce the burden on working age carers and give individuals more certainty about what the state will provide if they need care in future, so that they can plan ahead. A recent report by IPPR highlighted that 315,000 working-age carers have left the workforce.
- Increasing healthy life expectancy by putting a much stronger focus on public health and occupational health. Recent research by the Office for National Statistics highlights that your healthy life expectancy at birth can vary by up to 17 years depending on where you live.
- Ensuring a strong community infrastructure. This can include good public transport links so that people don’t have to take a taxi, through to joined-up information and advice so that someone facing a major life change has the support they need to adjust to major life events and maximise their income.
And there are other aspects too: housing, employment, and action to tackle loneliness which we know affects not just our happiness but our health. So if we truly want to build a sustainable retirement income we need to mix it up and look way beyond pensions.