Why we're woefully unprepared for old age

portrait of a sweet elderly woman in a red dress

When we, as a nation, discuss old age we more often than not contextualise it around pensions and specifically the state pension. But there is far more to the story of our ageing population than retirement income.

There are myriad factors to the ageing puzzle; housing, ill health, long-term care and transport to name but a few.
The government is working towards the average Brit working for two-thirds of their life and for the final third to be spent in retirement. It has draw up numerous plans to help us get there, including a more generous state pension that we will have to work for longer to get and auto-enrolment whereby individuals are shouldering more of the burden of their retirement.

These policies are revolutionary and much-needed although they may not be popular. We also have the Dilnot Commission which has set out a new way for care that caps the costs and says people will not have to sell their homes to pay for care (although if you read the proverbial small print you'll see that's not quite the case).

We also know that an ageing population will suffer more ill health, putting a strain on the NHS, and where will older people live if they cannot or do not want to live alone? This country just doesn't have enough retirement housing to accommodate our oldest citizens.

In fact this country is completely lacking any joined-up thinking when it comes to dealing with an ageing Britain. Each government department just puts its head down and gets on with its own task when what we really need is an older age taskforce that will ensure that Britain is a better place to live as you age.

The second fault line is that the government is dealing with these crises as they appear. We've known the country is getting older for decades so why is it only now, when the problems are upon us, that we are tackling them one by one?

It's a criticism of successive governments that none have had the bottle to tackle these impending problems, instead tinkering at the edges of pensions, or healthcare, or social housing to trick us into thinking it will be alright.

But it won't be. And the ones that will suffer will not today's oldest, it will be you.

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Why we're woefully unprepared for old age

If, like many Britons, you have failed to save the cash you need to maintain a comfortable standard of living in retirement, one option is to sell your home and downsize to a smaller property, using the money leftover to cover your living costs.
If moving out of the family home is too much of a wrench, however, the good news is that equity release schemes allow you to stay in your house or flat while still using the equity built up in it to provide some extra cash. The downside of the schemes, which work a bit like mortgages, is that you may not have much left to pass on to any children or other relatives.
But that's a small price to pay for a reasonable standard of living. For more information, try Age UK on 0800 169 6565.

Choosing the right annuity can have a significant impact on your retirement income. And as with most pensions, you automatically have what's called an 'open-market option' (OMO), you can scour the market for the highest annuity rate.
It is worth checking what your pension provider is offering first, though, as some companies offer guaranteed rates for existing customers that are likely to beat those available elsewhere. The Pensions Advisory Service on 0300 123 1047 is a good place to get some free advice.

On retirement, most people convert their pension fund into a guaranteed income annuity that pays out the same amount every month for the rest of their lives.
However, you can also choose an increasing annuity that pays out smaller amounts in the first few years but offers larger payments further down the line. This may prove a wise move if the rate of inflation remains at over 2%.

It is now easier to work later in life because the "default retirement age" has been scrapped.
People approaching retirement age and worrying about money can therefore choose to work for a few years longer - potentially transforming their financial situation. Other than the extra income from working, these people can look forward to higher state pensions, and higher annuity rates due to their greater age.
They can also benefit from bigger tax allowances and the fact that they no longer have to pay National Insurance contributions. Check out this nidirect website for more details.

You could get a much better rate with an impaired-life annuity if you have a medical condition that is likely to reduce your life expectancy.
Incredibly, even snoring, which is a common symptom of Sleep Apnoea could have an impact.
According to figures from MGM Advantage, a man with this condition could receive an extra £12,000 retirement income over the course of their retirement - or £571.44 extra money each year. Click here to find out more.

To maximise your retirement income, it is vital to ensure that you are receiving all the benefits to which you are entitled. These include the basic State Pension, and in some cases, the additional State Pension.
If you are on a low income, you could also qualify for the guaranteed element of Pension Credit, while those with some savings may get the savings element of this benefit. For more information about these and other benefits such as the Winter Fuel Payment, click here.

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.

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