So what are the facts as far as the emerging demographics are concerned? The following are just some of the statistics we have analysed, all based on data from the Office of National Statistics and the Government Actuary’s Department.
By 2031, less than 25 years away, over one-third of the UK population will be over 55, while 22% will be over 65. There are two major implications of this. Firstly, the working lives of individuals will have to extend beyond 65 to ensure that there are enough in the workforce to meet the nation’s needs. Secondly, the notion that retirement is just a few twilight years after a lifetime of slog is no longer relevant.
Retirement is likely to cover a considerable amount of time and must be paid for. However, those aged from 16 to 64 will not be enough in number to fund the retirement of those of 65 plus. The dependency ratio, which has been falling for a very long time, falls even further. In 1971 there were 4.6 people in the 16 – 64 bracket for every person of 65 plus but this will fall to 2.7 by 2031. It just won’t be possible or acceptable for those working to fully support those in retirement.
We are, therefore, seeing the harmonisation of men/women retirement ages, the gradual increase in all retirement ages, and severe pressure being put on personal and state finances in respect of such things as pensions, health costs and care costs for the elderly.
Looking at life expectancy in more detail, in short people are living ever longer. Taking into account improving mortality rates men of 65 now can expect to live until they are 86 and women to 88. And the trend of greater and greater life expectancy will continue for the foreseeable future. Current 40 year-olds who make it to 65 can expect to live into their nineties or very close to.
Even with increased state retirement ages, it appears that men will have a retirement of about 22 years to look forward to and women will have about 24 years. However, 22 or 24 years is a long time to finance oneself without working, a long time to fill in an interesting, fulfilling and valued way, and a long time to stay physically and mentally healthy. It means people will work for, say, 40 to 50 years and then be without paid employment for 20 to 25 years. In itself this is a lot of years but it is also a large proportion of one’s life.
But length of life is not automatically associated with quality of life and, while life expectancy is increasing, a number of our final years will be in less than perfect health. On average men can expect about 7 of their final years to be associated with a limiting longstanding illness and women about 9 years. There is still a lot to do.
In terms of working longer we are already seeing increased numbers of people working on beyond state retirement age. Over the past two years the general increase in working numbers has been in total about 2%. However, for men over 65 the growth has been 12% and for women over 60 the growth has been nearly 15%. Although these latter figures are still fairly low in absolute terms they are growing rapidly as many people choose or feel the need to continue working longer.
