Cost-of-living crisis impacts standard of living for baby boomers

• New research reveals how the current cost-of-living crisis has impacted the standard of living for the majority of over 55s (61%)
• Almost two thirds (63%) have seen a drop in disposable income, more than half (57%) haven’t been able to save at all or as much as they had previously and more than a third (35%) have drawn from savings to mitigate rising costs
• And more than half (57%) expect their financial situation will  get  worse over the next 12 months
• This comes as households brace for further cost rises in essentials, including food and energy  

The cost-of-living crisis has significantly impacted Baby Boomers’ standard of living and ability to save for the future, according to The Great Retirement Study released by abrdn in association with The Wisdom Council.

The Great Retirement Study, which surveyed more than 2,000 adults aged 55 to 75, has found that the cost-of-living crisis has impacted the majority of over 55s (61%), with one in nine (11%) saying the crisis has impacted them to a great extent. 

Baby Boomers are being advised to urgently review their spending and saving habits as those aged 55 to 65 are feeling the impact the hardest, with almost seven in ten (68%) saying that the-cost-of-living crisis has impacted their standard of living, compared to just over half (52%) of those aged 70 to 75. 

Additionally, almost two thirds (63%) of over 55s overall have seen a drop in disposable income, the majority (57%) haven’t been able to save at all or as much as they had previously and over a third (35%) have had to draw from their savings to mitigate rising costs potentially jeopardising future retirement plans.

The research found that nearly three quarters(73%) of over 55s have also taken steps to use less gas and electricity, including not heating their homes or using appliances less frequently to save money. 

A third (32%) have put major purchases – like cars and home improvements – on hold, while almost a quarter (23%) have cancelled services like TV subscriptions and gym memberships, and almost three fifths (59%) are going out less to further save money. 

Looking ahead, more than half (57%) of respondents over 55 expect their financial situation to get even worse over the next twelve months with certain groups more impacted than others. 

This increases for certain groups within the over 55s, in particular those with wider financial and health concerns. Over eight in ten (82%) of those who don’t feel confident that they’ll be able to retire comfortably, expect their situation to get worse, as do almost seven in ten (68%) who don’t have a retirement plan. A similar amount (69%) of those that think they’ll provide care to loved ones believe their situation will get worse, as well as 64% of those who cite they have poor health themselves. Additionally, two thirds (65%) of those aged 55-59 who are currently still working expect their situation to get worse, vs half (52%) of those a decade older (aged 65 to 69) who have already retired. 

This comes as households brace for energy cost rises of as much as 40% in April as the government raises the discounted price consumers pay for gas and electricity¹, and as analysts warn of a potential £788 hike in grocery bills this year amid surging food price inflation².

Colin Dyer, Financial Planning Expert at abrdn, said: “A sky-high cost of living has become a fixture of life post-lockdown. At any age, but particularly in or near retirement, long-term rising costs can feel overwhelming. That’s why it’s so important to stay close to your spending to ensure your resources will last through all the chapters of your retirement.  

“People in this position should look at ways to make their money work as hard as possible by keeping a close eye on the risks and returns from their existing savings pots, as well as making use of any available tax allowances.”

Alison Malton, Director at The Wisdom Council said: “With pension values hit and living costs rising, our research shows how everyone is being squeezed by the current economic situation. Whilst the older groups surveyed were more likely to benefit from final salary pensions, the younger end of this cohort, and many across the board, do not enjoy this safety net. 
 
“There may be little sympathy at large for the baby boomer generation who have ‘had it so easy’, but we clearly see significant inequalities within this generation, in both their attitudes to work and their preparedness for retirement. We look forward to continuing to delve into the insights from this fascinating project on the mindsets of this large, wealthy but complex generation.” 

Mr Dyer concluded: “Expert help is available, and we’d encourage people to look at free tools and resources, as well as professional financial advisers who can help you see the full picture and spot ways to make the most of your savings. We’d urge everyone approaching retirement to seek guidance, especially in the current economic climate.”

Impartial guidance is available for free from Pension Wise either face-to face or over the phone. abrdn also provides a free 15-minute call to discuss options for general financial advice, savings and investments and retirement planning. This is available to book via its website: https://www.abrdn.com/en-gb/personal/financial-advice 

To find out more about The Wisdom Council’s Great Retirement Study, please visit: www.thewisdomcouncil.com/retirement

ENDS

Methodology 

The Wisdom Council surveyed 2,018 55-75 year olds online between 1-12 December 2022. Quotas were set by individual age to ensure a good spread of responses across the age group. Stay-at-home parents, students and people who have never been in paid employment were screened out as were those not involved in decision making around their retirement planning. All respondents had a minimum annual household income before tax of £10,000 and non-pension savings and investments of at least £1,000.

Additional sources

• https://www.theguardian.com/money/2023/feb/05/energy-prices-to-soar-again-as-jeremy-hunt-rejects-pleas-to-halt-rise
• https://www.kantar.com/uki/inspiration/fmcg/2023-wp-grocery-price-inflation-rises-to-record-16-7

Notes to Editors

abrdn is a global investment company that helps clients and customers plan, save and invest for their future.

abrdn manages and administers £508 billion of assets for clients, and has over 1 million shareholders. (Figures as at 30 June 2022).

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We’re the number one adviser platform business in the UK for assets under administration (Fundscape Q1 2022). We’re also the first UK adviser platform provider to receive and retain an ‘A’ rating from AKG for the financial strength of our platforms (AKG financial strength reports 2021).

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About The Wisdom Council 

The Wisdom Council is an insight agency – providing research, inspiration and an independent perspective to the financial services sector, working with many of the largest retail banks, wealth and asset managers in the UK. For almost 10 years, TWC have been industry pioneers in putting customers at the heart of business decision making. Delivering insight-led strategies for good governance and innovation, and through client communities, they aim to deliver on their belief that everyone should have the opportunity to a secure financial future. The insight they produce drives towards a sustainable finance industry, in which previously underserved customers understand how long-term savings and investments can help them.

The Wisdom Council’s collaborative research progammes are a catalyst for industry-wide change, understanding how to better serve hard-to-reach audiences with financial products they know little or nothing about. The Great Retirement Study has delved into the attitudes and behaviours of the 55-75-year-old cohort through a three-month programme of qualitative and quantitative work.