Elderly shouldn’t be excluded from economic activity: the truth about finance

You’ve no doubt noticed that the UK’s state pension age will be rising to 66 years for both men and women by 2020. This move has been made because general good health and longevity have resulted in a rise in the number of elderly people as a percentage of the general population.

Figures from the 2011 Census in England and Wales show that there were 9.2 million people aged 60 years or over, equivalent to 16% of the total population at the time, while other research suggests life expectancy has risen 5 years for women and 7 years for men over the past three decades.

With a default retirement age no longer enforced in the UK, there is no cut-off point at which citizens must give up work. This means older people can continue to contribute to our economy – with there even being suggestions that it is our older workforce which is driving economic recovery.

The over 60s can still contribute to the economy

While 90% of the over 65s were described in the 2011 Census as being ‘economically inactive’, it’s interesting to note that 16% of 65-74 year olds sat at the opposite end of the spectrum.

It’s becoming increasingly common to see older people leading active, healthy lives and there’s no reason why they should be excluded from working because of their age. The Government has already made changes in this direction by abolishing the Default Retirement Age and our country now claims to have the highest number of over 65s in employment since 1992.

Age charity Royal Voluntary Service (formerly WRVS) even claim that over 65s contribute £40 billion to our economy through taxes, spending, social care and volunteering.

Despite the increased demand for pensions, welfare and health services which an older population requires, the charity also suggest economic contribution from older Brits could grow by as much as £77 billion over the next 16 years (by 2030).

The power of the grey pound

Another economic factor of the older population is that their disposable income can be much higher than younger generations. This is partly due to lower fixed costs as mortgages may have been paid off and children are likely to be grown-up and living independently.

For some, increased funds have come from maturing savings and investments. For others, more available cash could be due to downsizing from family homes to affordable and high quality retirement homes.

The result is that older consumers are spending more, with this money going directly into our economy. A report by Saga, a financial services and leisure company for the over 50s, revealed that this age group accounted for over 47% of UK household spending in 2012.

For those who are still working, the amount available to spend on goods and services will be even greater which can only be good for the UK economy.

Working people have better health

A 2013 study by the Institute of Economic Affairs (IEA) ‘Work Longer, Live Healthier’ also found that retirement can result in a serious decline in health. It suggests working longer has both health and economic benefits which would positively impact individuals and healthcare resources.

Excluding elderly from our economic activity will therefore not only be detrimental for them, but also for us.