Spending sprees by retirees are adding billions to the UK economy, researchers have found, while spending by younger people is falling.
But although some pensioners are indulging themselves, barriers including inaccessible high streets, poorly designed products and age-discriminatory attitudes mean people aged 75 and over are not spending their wealth.
If these barriers were tackled, the additional spending could add an extra 2% to UK GDP – or £47bn – by 2040, according to the International Longevity Centre (ILC).
“We’ve become accustomed to hearing our ageing population talked about as a bad thing – but the reality is it could be an opportunity,” said David Sinclair, director of the ILC. “While often painted as a risk to our economy, the UK’s ageing population brings economic opportunities through older people’s growing spending, working and earning power.
“There are enormous gains to be made by individual businesses and for the economy as a whole if we can unlock the spending and earning power of older adults,” he said. “But too many people face barriers to working and spending in later life. We need concerted action to tackle the barriers to spending and working in later life.”
Spending by those aged 65 and over increased by 75% between 2001 to 2018, compared with a 16% fall in spending by those aged 50 and under during the same period, according to the ILC report, Maximising the Longevity Dividend.
By 2040, older people will be spending 63p in every pound spent in the UK economy – up from 54p in 2018. Older people are spending their money right across the economy, the report found, but the top three growing sectors were recreation and culture, transport and household goods and services.
Maja Gustafsson, researcher at the Resolution Foundation, said: “The growth of the ‘grey pound’ is important for local economies, particularly in those areas that are ageing rapidly. But we shouldn’t forget the huge living standards squeeze among working-age families, the legacy of which follows them into retirement through lower asset accumulation.”
The report also revealed that the contribution of older people through work was likely to increase, with people aged 50 and over accounting for at least 40% of total earnings by 2040, an increase of 17% between 2004 and 2018.
The ILC research also showed that by 2028, more people aged 60 and over might work part-time than any other age group except for people aged under 30. By 2040, the number of people who are self-employed aged 50 and over may nearly catch up with the number of younger self-employed workers.
Sinclair said: “Our new research will reveal how working longer is already contributing to economic growth. But we are still not maximising the economic potential of older workers. Over 1 million older people leave the workforce before they are ready to do so, at huge economic cost for the country and social cost for individuals and families.”
Alistair McQueen, head of savings and retirement at Aviva, said: “There are more over-50s in work than ever before, and yet we continue to see a collapse in employment participation as we progress towards our state pension age. This is bad for the individual and bad for UK plc. For the UK to win on the global stage, age must be no barrier to opportunity.”
Yvonne Sonsino, partner at Mercer, agreed: “Older workers lower employment costs because they are less likely to leave and so are the people they supervise. They also add to productivity through enhanced knowledge sharing, group cohesion, high resilience and greater customer connectivity.”
The report found that, if this “missing million” of involuntarily unemployed older adults were supported into work by 2022, it could add 1.3% a year to GDP by 2040.
