Older people are being forced to spend less

The Financial Times has kindly today printed my letter below, commenting on the change taking place in demand patterns as a result of ageing populations.

FTSir, It was interesting to see the UK’s employment and pension ministers reminding FT readers that “by 2022, there will be 3.7m more people aged between 50 and state pension age in the UK, yet 0.7m fewer people aged 16 to 49” (Letters, August 1).

Their message about the need to adapt to this change needs to be heard more widely than just by employers. For example, Office for National Statistics data tell us that household spending decreases quite sharply past the age of 50. It shows that average weekly spend falls from a peak of £610 for households headed by someone in the 30-49 age bracket to £565 for those headed by someone aged 50-64, and to just £453 for those aged 65-74.

The ageing of the UK population is thus inevitably reducing the outlook for economic growth, as consumer spending is nearly two-thirds of gross domestic product. It also throws into question the logic behind today’s artificially low levels of interest rates, given that the majority of UK households are now headed by someone over the age of 50.

Increasing life expectancy means the policy is effectively forcing older people to save more today, and spend less, if they want to protect their lifestyle in retirement.

Paul Hodges
Chairman, International eChem

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