CHALLENGE: Report highlights the 'forgotten fifties' who earn less than the average salary and who will likely struggle to save adequately for their retirement

A recent report by the Centre for Ageing Better and the Resolution Foundation, highlights the 'forgotten fifties' who earn less than the average salary and who will likely struggle to save adequately for their retirement.

According to the report, the recent pay squeeze has left many of Britain's 1.8 million older low and middle income households struggling to save for retirement, despite enjoying strong employment growth over the last 20 years.

The report looks at the living standards of one in three LMI (low and middle income) households headed by someone aged between 50 and State Pension Age.

Public and political debate has tended to focus on issues facing younger LMI households such as home ownership, welfare support for children and school provision - often contrasting with the perceived affluence of well-off members of the 'baby boomer' generation.

But the 1.8m older LMI households are in neither of these groups and face significant challenges to their living standards at a time when they need to be preparing and saving for retirement.

The report found that older people in LMI households are: working more than ever. Around three in four people in these households are in work, compared to 58 per cent in 1997-98. Workers aged 50+ have accounted for two-thirds of overall employment growth since 2010, including two thirds of self-employment growth.

Four in five workers earn less than the typical annual salary of £21,000, while half of working women from older LMI households earn less than £12,600.

Older people in LMI households are far less wealthy than their better-off peers. Their typical level of wealth (including housing, pensions and other savings) is, at £245,000, less than a third of the wealth held by higher income households (£825,000) of the same age.

They also face two key living standards challenges, living alone and saving for retirement.

The proportion of older LMI households comprised of single people has almost doubled over the last 20 years to 38 per cent largely due to increased divorce rates which presents a big challenge through extra resources placed on living as a single person, such as higher housing costs.

Older households’ ability to save for retirement has been helped by strong employment growth over the last 20 years. However, this hasn’t been enough to prevent a sharp income squeeze in the wake of the financial crisis, when typical incomes fell by six per cent.

As a result, typical incomes for older LMI households in 2014-15 had only just recovered back to pre-crisis levels (2007-08), and half of these households had less than a month’s worth of income in savings.

The report says that government and employers have a key role to play in improving the labour market experiences of older workers to help them work for longer, save more and boost their incomes in retirement.

Anna Dixon, Chief Executive at the Centre for Ageing Better, said: “The ‘baby boomer’ generation is often talked about as a homogenous group, widely reported as being wealthier and more successful than other generations. But this report sheds light on the ‘forgotten fifties’ who earn less than the average salary and who will likely struggle to save adequately for their retirement.

“It is important that this group and their specific challenges are recognised and that the next government addresses their needs. Our report shows positive employment growth for this group, but incomes are still low. More needs to be done to ensure that people in later life are supported to progress, develop and have access to good quality roles.

David Finch, Senior Economic Analyst at the Resolution Foundation, said: “The best way to help Britain’s two million older households on low and middle incomes is get Britain’s jobs boom back on track. This should be a top priority for the next government.”