Cost-of-living crisis impacts standard of living for Baby Boomers

The cost-of-living crisis has significantly impacted Baby Boomers’ standard of living and ability to save for the future, according to The Great Retirement Study released by abrdn in association with The Wisdom Council.

The Great Retirement Study, which surveyed more than 2,000 adults aged 55 to 75, has found that the cost-of-living crisis has impacted the majority of over 55s (61%), with one in nine (11%) saying the crisis has impacted them to a great extent. 

Baby Boomers are being advised to urgently review their spending and saving habits as those aged 55 to 65 are feeling the impact the hardest, with almost seven in ten (68%) saying that the-cost-of-living crisis has impacted their standard of living, compared to just over half (52%) of those aged 70 to 75. 

Additionally, almost two thirds (63%) of over 55s overall have seen a drop in disposable income, the majority (57%) haven’t been able to save at all or as much as they had previously and over a third (35%) have had to draw from their savings to mitigate rising costs potentially jeopardising future retirement plans.

The research found that nearly three quarters(73%) of over 55s have also taken steps to use less gas and electricity, including not heating their homes or using appliances less frequently to save money. 

A third (32%) have put major purchases – like cars and home improvements – on hold, while almost a quarter (23%) have cancelled services like TV subscriptions and gym memberships, and almost three fifths (59%) are going out less to further save money. 

Looking ahead, more than half (57%) of respondents over 55 expect their financial situation to get even worse over the next twelve months with certain groups more impacted than others. 

This increases for certain groups within the over 55s, in particular those with wider financial and health concerns. Over eight in ten (82%) of those who don’t feel confident that they’ll be able to retire comfortably, expect their situation to get worse, as do almost seven in ten (68%) who don’t have a retirement plan. A similar amount (69%) of those that think they’ll provide care to loved ones believe their situation will get worse, as well as 64% of those who cite they have poor health themselves. Additionally, two thirds (65%) of those aged 55-59 who are currently still working expect their situation to get worse, vs half (52%) of those a decade older (aged 65 to 69) who have already retired. 

This comes as households brace for energy cost rises of as much as 40% in April as the government raises the discounted price consumers pay for gas and electricity¹, and as analysts warn of a potential £788 hike in grocery bills this year amid surging food price inflation².  

Colin Dyer, Financial Planning Expert at abrdn, said: “A sky-high cost of living has become a fixture of life post-lockdown. At any age, but particularly in or near retirement, long-term rising costs can feel overwhelming. That’s why it’s so important to stay close to your spending to ensure your resources will last through all the chapters of your retirement.  

“People in this position should look at ways to make their money work as hard as possible by keeping a close eye on the risks and returns from their existing savings pots, as well as making use of any available tax allowances.”

Alison Malton, Director at The Wisdom Council said: “With pension values hit and living costs rising, our research shows how everyone is being squeezed by the current economic situation. Whilst the older groups surveyed were more likely to benefit from final salary pensions, the younger end of this cohort, and many across the board, do not enjoy this safety net. 

“There may be little sympathy at large for the baby boomer generation who have ‘had it so easy’, but we clearly see significant inequalities within this generation, in both their attitudes to work and their preparedness for retirement. We look forward to continuing to delve into the insights from this fascinating project on the mindsets of this large, wealthy but complex generation.” 

Mr Dyer concluded: “Expert help is available, and we’d encourage people to look at free tools and resources, as well as professional financial advisers who can help you see the full picture and spot ways to make the most of your savings. We’d urge everyone approaching retirement to seek guidance, especially in the current economic climate.”