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Poverty in Later Life

Evidence type: Insight i


Older people are often presented as the classic ‘babyboomer’ stereotype, with large private pensions and substantial property wealth. But people in later life are a wide and varied group, and not everyone is enjoying a financially secure retirement. Since the dramatic falls in the proportion of people over State Pension age living in relative income poverty in the 1990s and 2000s – from highs of 29% to a low in 2011–12 of 13% – it has often been considered a ‘solved issue’. Since 2012, there has been a slow but steady rise in income poverty among older people, with now almost 1 in 5 older people (18%) in relative income poverty after housing costs.

In this report, new research, commissioned from City, University of London (a member institution of the University of London), into income dynamics in later life is presented alongside Independent Age’s policy calls for tackling poverty in later life and a discussion of the different ways of defining and measuring poverty.

The study

Previous research in this area measures poverty by using a quantitative ‘snapshot’ of households taken each year, in addition, income dynamics in later life are not something that have historically been looked at in much detail.

The research detailed in this insight report aimed to go further than previous studies, examining income dynamics in later life in more detail, specifically: How dynamic is income in later life? Who is more likely to enter poverty? What events and drivers impact income after retirement?

The study tracked individuals over State Pension age across a two-year period (2017-18 to 2018-2019) and a nine-year period (from 2010–11 to 2018–19). The academics looked at how the income of their households changed and at their movements into and out of poverty.

For the purposes of this study, poverty was defined using the Households Below Average Income (HBAI) relative income after housing costs definition. This sets the ‘poverty line’ at 60% of median UK household income in the present day. Households that fall below this 60% median are defined as being in ‘relative poverty’. Households that fall below 50% of median UK household income are described as being in ‘severe relative poverty’.

Key findings

  • Poverty in later life is a growing problem in the UK. Pensioner poverty has been rising slowly but surely since 2012 and is now at its highest level since 2008 at 18%.
  • Pensioners who enter poverty tended not to have been living on high income previously. The majority (58%) of pensioners who entered poverty were in the second poorest income quintile a year earlier, and another quarter (25%) were in the middle quintile.
  • Though older people’s income fluctuates less than in younger groups, there is still movement in and out of poverty, with 40% of pensioners spending at least one year in poverty in a nine-year period. When looking at the data over a nine-year period, around one in 20 (6%) pensioners was longer-term poor, which means they experienced poverty for seven to nine years of the nine-year period.
  • Certain groups of pensioners are more likely to experience longer-term poverty, in particular people who are:
    • Single – 11% of single women and 9% of single men experience longer-term poverty
    • Black – 17%, although larger sample sizes would be needed to determine whether this is statistically significant
    • Renters – private renters 25% and social renters 19%
  • Changes in social benefit income are the biggest single cause for older people entering and exiting poverty. Three in five (61%) pensioners who enter poverty during later life have experienced a reduction in social benefit income. The average decrease in social benefits for an older couple who enters poverty from one year to the next is £542 a month.
  • Households in poverty that experienced an increase in social benefit income had 20 times more chance of exiting poverty than households that saw no change. This is particularly true of the 75+ age group, rather than the State-Pension-age-up-to-74 age group, who are more likely to enter or re-enter the workforce to exit poverty. Pensioners living in a household where labour income increased had more than 16 times the chance of exiting poverty than households where labour income did not change.
  • This study outlines three key policy recommendations for reducing poverty in later life:
    • The government must fulfil its commitment to restore the State Pension triple lock from April 2023.
    • The DWP should conduct a wider review of the adequacy of the State Pension, with the government setting out at what level it wants the State Pension to be valued relative to average earnings.
    • The government should commit to protecting vital benefits for older people that are currently under threat, including by reversing its proposal to scrap free prescriptions for 60–65-year-olds.

Points to consider

  • Methodological strengths/weaknesses: The statistics referred to throughout this report are taken from the commissioned research by City, University of London on the causes of poverty in later life, unless stated otherwise.
    • The methodology used in this research is not detailed in this report, however, the strengths and limitations of the poverty measure used is provided in some detail. In addition, the selected poverty measure (HBAI) is the most commonly used definition, allowing for comparison with other major statistical releases.
    • The authors cite that the sample sizes for some socio-demographic sub-categories were too small to determine statistical significance and have indicated that further qualitative research is required to substantiate the findings.
  • Generalisability/ transferability: The research methods used suggest that the findings can be applied with a degree of confidence universally within the UK.
  • Relevance: This report is relevant to all stakeholders, academics and policymakers who are interested in understanding the income dynamics of households in later life and presents a new source of longitudinal data for this demographic.
    • The insights and practical recommendations from this research will help policymakers to develop initiatives designed to reduce poverty in later life.

Key info

Client group
Year of publication
United Kingdom
Contact information

Thomas Wilson, Phil Mawhinney, Morgan Vine Independent Age 18 Avonmore Road, London, W14 8RR 020 7605 4200 [email protected] independentage.org