The COVID-19 crisis will result in disproportionate under-employment and unemployment for older workers, who represent a greater share of the working population, findings from new research have highlighted. Over-55s represented more than 50% of the employment growth in the decade to 2018[1].
Career uncertainty
The Centre for Ageing Better found that, when out of work, older staff are far more likely to face long-term unemployment, with just a third of over-50s returning to work after losing their job, compared with more than half (54%) of 35-49-year-olds[2].
Amidst this career uncertainty, a large number of over-50s are now facing financial worries as a direct result of the COVID-19 pandemic. Over a third (37%) have seen their household income decrease during the pandemic, as companies furlough staff while cutting back on wages and head count.
Incomes impacted
For workers who have seen their income drop, large numbers have turned to their reserves to counter this, with nearly a quarter (25%) having dipped into their savings to help meet everyday living costs. Over two-thirds (68%) are concerned about their cost of living currently, with a third (35%) reducing their daily expenditure as a result. With incomes impacted, well over half (58%) are also worried about how the pandemic will impact their savings long-term.
The UK is now formally in a recession, with many over-50s feeling apprehensive about their job security. It’s an unfortunate fact that this group is less likely to secure another role once out of work, meaning redundancy can have serious long-term repercussions on their retirement.
Delaying retirement
The Government’s furlough scheme ended in October to be replaced by the Job Support Scheme, paying up to 67% of the wages of workers at firms told to shut because of coronavirus rules.
The research found that over-55s spend more time choosing a new car than they do planning their retirement[3], despite the fact that they might have to live with the consequences of that decision for 30 years or more. Given 1.2 million over-50s[4] are now considering delaying their retirement because of COVID-19, there is a clear need for people to understand their options before making panicked decisions.
Professional advice
With all the current uncertainty, having a solid understanding of retirement is essential to being equipped with the tools to enjoy a comfortable retirement. The coronavirus crisis and the knock-on effects of the global pandemic have illuminated the value of professional financial advice, research has shown[5]. More than a third of people reported that the COVID-19 crisis had prompted them to value the benefits of advice more.
Of the people surveyed, 17% said that they regretted their previous reluctance to pay for professional advice and more than a fifth (21%) wished they had a proper financial plan. This highlights that more people are now placing more value on guidance and advice to make the right decisions, giving confidence in their long-term financial planning arrangements.
Long-term impact
57% were concerned about the long-term impact of the pandemic crisis on their investments and 46% were worried about their retirement income. The research also showed people believed they would think about their finances differently as a result of the coronavirus crisis.The pandemic is causing people to rethink their previous financial planning arrangements.
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Source data:
[1] https://www.ilo.org/wcmsp5/groups/public/---dgreports/---dcomm/documents/briefingnote/wcms_738753.pdf
[2] The Centre for Ageing Better: A mid-life employment crisis (Office for National Statistics, Labour market overview, UK: August 2020)
[3] Legal and General research, Over-55s spend more time buying a car than deciding how to use their pension.
[4] - Opinium Research ran a series of online interviews among a nationally representative panel of 2,004 over-50s from 30 July to 5 August 2020.
Calculation: 452 out of 2,002 UK adults on a separate nationally representative survey counted themselves as aged 50 and over and not retired. 452 / 2,002 * 52,673,000 = 11,892,206. On the survey focusing on the over-50s, 89 of the 1,076 who did not count themselves as retired said that they would most likely need to delay retirement. 89 / 1,076 * 11,892,206 = 1.2 million.
[5] https://www.columbiathreadneedle.co.uk/en/education-centre/2020-articles/covid-19-experience-highlights-value-of-financial-advice-for-uk-consumers-05-august-2020/?it=Private