Life is getting tougher for pensioners, as their fixed incomes are stretched thinner than ever by rocketing food and fuel bills. However, at the same time, there's £5.5 billion in benefits waiting to be claimed by pensioners.
So what is this money, and why isn't it being claimed?
The seriousness of the financial crisis facing pensioners must not be underestimated. New research from Age UK found that 56% are worried about affording the absolute basics of feeding themselves and paying for heating. A fifth had to cut back on heating this winter, while a fifth are buying cheaper food. It's a growing crisis, which means that 1.7 million pensioners are now living in poverty.
However, at the same time as pensioners struggle, there are billions of pounds which should be lining their pockets, which are lying unclaimed at the Treasury.
What is this money?
The bulk of the money is pension credit - which makes up £2.8 billion. According to Age UK, around 38% of all those who are entitled to pension credit do not claim it - that's around 1.58 million people. The credit will top up your income to £145,40 a week, and the average amount being missed is £1,092 per person per year.
Housing benefit also makes up a chunk of this. Age UK estimates that 390,000 people are missing out, and that the average amount of unclaimed housing benefit is £2,444 per person per year. That comes to a total of £1.03 billion.
And finally there's Council Tax, of which £1.69 billion goes unclaimed every year. Age UK estimates that 46% of those who would be entitled to it don't claim it - which works out as 2.23 million people. The average person is missing out on £728 a year.
Seven retirement nightmares
Pensioners confused into losing £5.5bn benefits
Figures from charity Age UK show that 29% of those over 60 feel uncertain or negative about their current financial situation - with millions facing poverty and hardship. Even though saving for retirement is not much fun, the message is therefore that having to rely on dwindling state benefits in retirement is even less so. To avoid ending up in this situation, adviser Hargreaves Lansdown recommends saving a proportion of your salary equal to half your age at the time of starting a pension. In other words, if you are 30 when you start a pension, you should put in 15% throughout your working life. If you start at 24, saving 12% of your salary a year should produce a similar return.
Many older couples rely on the pension income of one person - often the man. Should that person die first, the other person can therefore be left in a difficult position financially.
One way to prevent financial hardship for the surviving person is to take out a joint life annuity that will continue to pay out up to 67% of the original payments to the surviving partner should one of them die.
The disadvantage of this approach, however, is that the rate you receive will be lower. Again, the Pensions Advisory Service on 0845 601 2923 is a useful first port of call if you are unsure what to do.
Around 427,000 households in the over-70 age groups are either three months behind with a debt repayment or subject to some form of debt action such as insolvency, according to the Consumer Credit Counselling Service (CCCS).
Its figures also show that those aged 60 or older who came to the CCCS for help last year owed an average of £22,330. Whether you are retired or not, the best way to tackle debt problems is head on.
Free counselling services from the likes of CCCS and Citizens Advice can help with budgeting and dealing with creditors.
Importantly, they can also conduct a welfare benefits check to make sure you are receiving the pension credit, housing and council tax benefits, attendance and disability living allowances you are entitled to.
The average UK pensioner household faces a £111,400 tax bill in retirement as increasing longevity means pensioners are living on average up to 19 years past the age of 65, according to figures from MetLife. And every year in retirement adds an extra £5,864 in direct and indirect taxes based on current tax rates to the costs for the average pensioner household. You can be forced to go bankrupt if you fail to pay your taxes, so it is vital to factor these costs into your retirement planning.It is also important to check that you are receiving all the benefits and tax breaks you are entitled to if you want to make the most of your retirement cash.
The cost of a room in a care home in many parts of the country is now over £30,000 a year, according to figures from Prestige Nursing and Care. So even if the prime minister announces a cap on care costs - last year the economist Andrew Dilnot called for a new system of funding which would mean that no one would pay more than £35,000 for lifetime care - families will still face huge accommodation costs. Ways to cut this cost include opting for home care rather than a care home. Jonathan Bruce, managing director of Prestige Nursing and Care, said: "For older people who may need care in the shorter term, home care is an option which allows people to maintain their independence for longer while living in their own home and should be included in the cap." However, the only other answer is to save more while you can.
Older Britons are often targeted by unscrupulous criminals - especially if they have a bit of money put away. For example, many over 50s were victims of the so-called courier scam that tricked into keying their pin numbers into their phones and handing their cards to "couriers" who visited their homes. It parted consumers from £1.5 million in under two years. Detective Chief Inspector Paul Barnard, head of the bank sponsored dedicated cheque and plastic crime unit (DCPCU), said: "Many of us feel confident that we can spot fraudsters, but this type of crime can be sophisticated and could happen to anyone." The same is true of boiler room scams that target wealthier Britons with money to invest, offering "once-in-a-lifetime" opportunities to snap up shares at bargain prices. Tactics to watch out for include cold calling, putting you under pressure to pay up or lose the opportunity for good, and claiming to have insider information that they are prepared to share with you.
Discover More Like This
BACK TO SLIDE
There are several reasons why this money is not claimed. Some people don't know they are entitled to it. Others don't know how to apply. Citizens Advice Chief Executive Gillian Guy said: "A lot of people simply don't know about the help that's out there. Others are put off because the system can seem very daunting. Some think the amount they get will not be worth the trouble. But all too often they are missing out on substantial amounts of extra cash that could make a real difference to their lives."
Age UK has a benefits calculator which works out what you are entitled to, and is a great place to start.
You can also get help in person - not just assessing what you are entitled to, but claiming for it as well. Charities like Age UK and Step Change have teams of experts trained to help you apply for benefits and complete all the paperwork properly. Alternatively you can ask for help at your local Citizen's Advice Bureau.
Meanwhile, some people will not claim benefits through a sense of pride. People are perfectly entitled to take any kind of stand they like. But given that so many of them have paid so much in tax over the years, and taken so little out of the system, surely they deserve some help with basic necessities as they get older.
The famous faces of bankruptcy
Pensioners confused into losing £5.5bn benefits
In 1895 at the height of his success following the publication of The Picture of Dorian Gray and The Importance of Being Earnest, Wilde was charged with gross indecency and became embroiled in a libel trial to defend himself against accusations of homosexuality. He lost the battle and was forced into bankruptcy to cover legal costs for himself and the accuser, the Marquis of Queensberry – whose son Wilde was allegedly having an affair with. According to TrueTV.com, some of Oscar's most prized possessions, including first editions of his own books, were seized and sold at auction to pay the bill.
In a lesson that personal net worth means nothing against spiraling debts, the King of Pop filed for filed for bankruptcy in 2007 when he couldn't repay a $25 million loan on his home, Neverland Ranch.
Despite being recognised as the most successful entertainer of all time by the Guinness Book of World Records, Neverland became Jackson's downfall – reportedly costing more than $10 million dollars a year to maintain. According to Moneycrashers.com, even after signing a nearly $1 billion recording contract in 1991 and selling more than 750 million records, Jackson had just 0.05% of his net worth in accessible cash, which left bankruptcy the only option.
Actress Kim Basinger filed for bankruptcy in 1993 after she was sued for breach of contract for refusing to appear in film Boxing Helena, which later bombed. The actress lost a $8.1 million lawsuit to Main Line Pictures as a result and was forced to sell her $20 million investment in the town of Braselton, Georgia, USA.
When Mozart died at the early age of only 35 in 1791, he was poverty stricken and left vast amount of debt behind, which totaled over 4,000 florins (the equivalent of more than eight times the annual salary of a middle-class government employee, according to Noiseaddicts.com). Reports prevail that there was such little money in the house at the time of his death that Mozart was buried in a mass grave, the exact location of which is unknown to this day.
Everyone's favourite crooner filed for bankruptcy in 1976 after the royalties from his next album were promised to his ex-wife as a substitute for maintenance payments. The album was titled "Here, My Dear."
Despite creating one of the best-selling albums of all-time with Bat out of hell, Meat Loaf had to file for bankruptcy in 1983, after a series of bad business deals and legal issues. The rock star fell victim to unscrupulous managers, who he discovered were stealing his money – only for them then to sue him for breach of contract. Just when it looked like his luck was improving ahead of the release of his album Blind Before I Stop – the producer put a dance beat on every track, alienating his rock fanbase, making the album a failure and forcing him into bankruptcy for a second time.
Just when things couldn't get any worse for ex-Atomic Kitten Kerry Katona, she's been made bankrupt twice in five years.
The first was in 2008 after failing to deliver the final £82,000 of a £417,000 tax bill.
She was in the press for money issues again this earlier this year when a a TV advert for pay day loans fronted by Katona was banned for being irresponsible. Cash Lady offers loans of up to £300 a month with an annual percentage rate of 2,760%. "We've all had money troubles at some point, I know I have," says Katona in the TV ad. "You could see your bank and fill in loads of forms, but is there an easier way to get a loan ... it's dead fast too. Fast cash for fast lives."
However, Katona was dropped as the face of a payday lending company after filing for bankruptcy for a second time.
She filed for bankruptcy at Wigan County Court in July 2013, the Insolvency Service confirmed.
Disney's fist animation company Laugh-O-Gram Studio filed for bankruptcy in 1922 when its financial baker went broke. Disney was no longer able to pay his employees or his debts, and according to Totalbankruptcy.com, even struggled to buy a bus ticket to Hollywood. But he made it and there he made a fresh start with his new self-named production company that remains a worldwide success today.
Despite earning millions during his boxing career, former world heavyweight boxing champion Mike Tyson was forced to file for bankruptcy in 2003. He mounted about $27 million in bills, and is said to have squandered nearly $300m in ring earnings through lavish spending and bad advice, according to BBC News. The 37-year-old spent extravagantly on mansions, Bentley cars, jewellery, and even pet Bengal tigers while buying expensive gifts for his large entourage. Also in 2003, Tyson agreed to pay his ex-wife $6.5m from future earnings as part of a divorce settlement.
Drinking, gambling, fast cars and womanizing saw football wonder boy Best squander his cash and succumb to bankruptcy in 1982 with debts of £22,000. According to Bankruptuk.co.uk, at the time of his death in 2006, Best had an outstanding mortgage of £100,000 and owed London's Cromwell hospital £300,000 in treatment fees.