One in five low-income pensioners ‘could not afford an emergency £200 bill’

More than half (54%) of pensioners on low incomes find it a struggle to keep up with bills and credit commitments, according to research for the Living Wage Foundation.

Three in 10 (30%) said they are in some level of debt and just over a third (35%) said they rely on money from other sources such as benefits or money from friends, family, a partner to get by.

A fifth (20%) said they could not afford an unexpected but necessary expense of £200, making them potentially vulnerable if, for example, their washing machine or boiler broke down and needed replacing or repairing.

Nearly half (48%) have cut back on hobbies and entertainment and 43% have reduced spending on gifts or donations, while 24% said they can rarely, if ever, afford the non-essentials that make life enjoyable.

Two-fifths (42%) of pensioners on a low income had considered themselves to be middle- to high-earners for the bulk of their working lives before retirement.

Meanwhile, 21% said they use their savings to cover everyday expenses, according to the survey, carried out by Savanta, among more than 500 people aged 66-plus across the UK in June.

For the research, people were defined as being on a low income if they were below the threshold for a “living pension”.

Different thresholds were used to account for people’s different living circumstances.

For example, the monthly income threshold for a single homeowner was £1,162 but for a couple renting privately it was £2,489.

More than a quarter (26%) of those surveyed said their income makes them more anxious and 25% said it has worsened their sleep.

The research also indicated that pensioners who rent or live alone were more likely to be in debt.

Some 43% of renters were in some level of debt compared with 23% of homeowners.

And 40% of people living alone were in debt compared with 25% of people living with a partner.

Around a third (34%) of people living alone said they could not afford an unexpected but necessary expense of £200 compared to 14% of people living with a partner.

Meanwhile 31% of renters and 15% of homeowners said they would not be able to meet a £200 unexpected cost.

The research also found that many of those on low incomes were reliant on the state pension as their main source of income, with 54% having no workplace pension to draw on.

The Living Wage Foundation’s living pension accreditation is a voluntary savings target for employers looking to help workers build up a pension pot to meet at least their basic needs in retirement.

Living pension employers commit to providing a living pension savings level, using either a cash or percentage target.

More than 75 employers are accredited, including Everton Football Club, Aviva and L&G.

The report quoted Sheila, a pensioner in her 80s, who said: “It’s tough, really tough.

“Everyone thinks older people are all rich, but it’s just not true.

“I’ve not turned my heating on for three years.

“I go running every day to keep warm in the winter and try to grow as many vegetables as I can in the summer.

“Our pension barely covers the basics, so there is no room for anything extra.”

She added: “When something breaks, the boiler, fridge, or I need a new pair of shoes, I panic, because I know I can’t just replace it.

“The constant stress and worry chips away at you.

“Living on my own also makes it harder.

“There’s no one to share bills with, no family to lean on.”

“I would say, we pensioners are not asking for luxuries, we just want enough to get by.

“We worked, we paid in, and now we’re left to struggle.”

Katherine Chapman, director of the Living Wage Foundation, said: “These findings show the tough reality for too many pensioners who, after a lifetime of work, are still left without enough to live on.

“No one should be worrying about putting the heating on when it’s cold or boiling the kettle for a cup of tea.”

Samantha Brown, a managing partner at living pension employer Herbert Smith Freehills Kramer, said: “Tackling the retirement savings gap will require a multi-pronged approach: expanding access to workplace savings schemes, improving financial literacy, and encouraging consistent long-term contributions.

“The key to this lies in exploring innovative strategies and advocating for policy reforms that help build more resilient retirement outcomes for future generations.”

A Government spokesperson said: “Supporting pensioners is a top priority and, thanks to our commitment to the triple lock, millions will see their yearly state pension rise by £1,900 this Parliament.

“We have also run the biggest-ever campaign to boost pension credit take-up, with over 57,000 extra pensioner households being awarded the benefit, worth on average around £4,300 a year.

“To ensure tomorrow’s pensioners will not be poorer than today’s, we are reviving the Pension Commission to tackle the barriers that stop too many people from saving.”