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Financial shocks sink over-60s into poverty

Posted on 13 October 2014

Average savings are less than total cost of dying

  • Over 60s too poor to die - average savings are less than total cost of dying
  • Over 60s unable to recover from financial shocks, leaving families to pay for funerals
  • 10% of over 60s unable to cover everyday essentials with income

SunLife, the expert in the cost of dying, has today published the findings from its 2013 annual Cost of Dying survey1. The cost of dying (including death-related costs such as probate, headstones and flowers in addition to the basic cost of a funeral) has risen above inflation2 and now stands at £7,622, an increase of 7.1% on 2012.

The research outlines how many over 60s are ill prepared for end-of-life costs. Just under a quarter of over 60s (23%) have no savings at all, increasing to almost a third of women (29%) and full-time carers (31%). Meanwhile, over half (51%) of over 60s do not regularly save.

The study identifies three distinct categories of over 60s, defined by their financial position:

  • Survivors - around 70% of whom have sufficient income to pay for everyday essentials
  • Strugglers - one in five (21%) who find that occasionally their income does not cover their everyday costs and they need to dip into their savings
  • Sinkers - 10% who do not have sufficient income to cover their costs, and either rely on savings or family and friends to help them out, or fall into debt.

For those with a financial buffer, they must manage a squeeze on savings. Those on lower incomes (C2DEs) are especially vulnerable and experience significant depletion of savings throughout later life. In 2000, the 60-69 demographic had a median £5,130 in savings; however, by 2010, the same demographic (now 70-79) had £4,000 – a reduction of £1,130.

For older people on fixed incomes there is increasing pressure from a rising cost of living, reducing the ability of pensioners to build on savings. The average income available for covering essentials is £737 per month, which decreases throughout retirement. Over a third of over 60s (35%) have no money left once essentials have been paid, increasing to 43% of full time carers.

As such, pensioners are at risk of being exposed to hard-to-manage financial shocks. For example expensive central heating repairs affect one in three over 60s but, with average savings of £4,022, there is little cushion to absorb the unexpected cost. Moreover, little provision can be afforded for funeral expenses.

A SunLife spokesperson said:

“Times are hard and it is difficult to put money aside, but the issue of end of life costs should not be ignored. Our research shows about a third of over 60s are struggling or sinking with their financial circumstances. Whatever your predicament, funeral costs are a certainty and no one wants to leave their families to pick up the tab. There are different ways to plan for later life and one size does not fit all as savings can be extremely difficult to replenish in old age. Financial shocks, like replacing a boiler, are unavoidable. It is important to have some form of plan in place because, for many, once that pot of savings has gone, it’s gone.”

Dr Kate Woodthorpe, lecturer in Sociology, the University of Bath, concludes:

“The debate about post retirement finances is often dominated by the costs of social care, but funerals are one of the universal demands on money and deserve greater attention. We already know that there are 1.8 million pensioners living in poverty and the general assumption that savings work for everyone is too simplistic. As funeral poverty stands at just over £131 million3, it is important to understand the various attitudes towards spending and saving within the population so that we can sensibly address the funeral funding crisis.”

ENDS

1 Sun Life Direct Cost of Dying Survey 2013
2 The rate of consumer prices index (CPI) inflation in the United Kingdom was recorded at 2.8% in July 2013 (Office for National Statistics)
3 18% of respondents said they struggled to meet funeral costs and the average funding shortfall was £1,277. Using the annual death rate of approximately 570,000, this means that over 100,000 people in the UK would have difficulty meeting funeral expenses, putting UK funeral poverty at £131 million. This represents a 50% increase in funeral poverty on 2010’s £85 million.

Notes to editors

About the research

The report was commissioned by SunLife:

  • Total cost of dying – the sum of the average costs for order sheets, venue hire, additional limo(s), funeral flowers, death notice, memorial, catering, and administration of the estate, plus the average cost for funeral, cremation or burial. NB this is the sum of all costs that could be incurred, however not everyone will incur all of these costs.
  • Cost of a funeral – the average of the cost of burial and the cost of cremation:
    • Cremation pricing criteria – the sum of the costs for professional services, clergy or officiates fees, doctors’ fees for certification, cost of the cremation
    • Burial pricing criteria – the sum of the costs for professional services, clergy or officiates fees, cost of the burial
 Cost of dying report 2013

Here's the information that you need to know about who we are and the other companies that we work with in order to provide our products and services.

Who are SunLife? 

Phoenix Life Limited trades as SunLife and is the provider of the Guaranteed Over 50 Plan, SunLife Insurance and the life insurance policy payment option for Funeral Plans. Phoenix Life Limited’s registered office is at 1 Wythall Green Way, Wythall, Birmingham, B47 6WG (registered in England, no. 1016269). Phoenix Life Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority and is entered on the Financial Services Register (registration no. 110418). As part of SunLife’s commitment to quality service and security, telephone calls may be recorded.

SunLife Limited distributes financial products and services and is a company limited by shares, registered office: 1 Wythall Green Way, Wythall, Birmingham, B47 6WG (registered in England, no. 05460862). SunLife Limited is authorised and regulated by the Financial Conduct Authority and is entered on the Financial Services Register (registration no. 769427).

You can contact us by post at SunLife, PO Box 1395, Peterborough, PE2 2TR or by phone on 0800 008 6060.

If you choose to add Funeral Benefit Option to your Guaranteed Over 50 Plan the funeral services are arranged and provided by Dignity Funerals Limited. Dignity Funerals Limited is a company registered in England and Wales No. 00041598. VAT registered No. 486 6081 14. 4 King Edwards Court, King Edwards Square, Sutton Coldfield, West Midlands, B73 6AP. Telephone No. 0121 354 1557. Fax No. 0121 355 808. Part of Dignity plc. A British Company. Dignity are not regulated by the Financial Conduct Authority or the Prudential Regulation Authority but are registered providers with the Funeral Planning Authority.

Who provides the Funeral Plans?

The funeral services are arranged by a funeral director selected by Golden Charter Ltd. Golden Charter Ltd are not required to be authorised or regulated by the Financial Conduct Authority or the Prudential Regulation Authority in relation to funeral plans but are registered providers with the Funeral Planning Authority.

If you choose to pay for your funeral in one go, with a single payment, you will have a contract with Golden Charter. The funeral services will be arranged by a funeral director selected by Golden Charter Ltd.

If you choose to pay for your funeral with a life insurance policy, the policy will be provided by Phoenix Life Limited, trading as SunLife. The funeral services will be arranged by a funeral director selected by Golden Charter Ltd.

Who provides My Smarter (ISA)?

My Smarter (ISA) is provided by Scottish Friendly Asset Managers Limited. Authorised and regulated by the Financial Conduct Authority. Details can be found on the Financial Services register, registration No. 188832. Member of The Investment Association. Registered Office: Scottish Friendly House, 16 Blythswood Square, Glasgow G2 4HJ.

Who provides the Will writing services?

Hugh James is authorised and regulated by the Solicitors Regulation Authority (SRA Number:303202).

The information contained on this website is based on Hugh James' understanding of the law of intestacy in England and Wales only as at April 2014. The law in Scotland and Northern Ireland is significantly different. This is for information purposes and is not intended to be legal advice.

Who provides Family Life Insurance?

SunLife Family Life Insurance is provided by Scottish Friendly Assurance Society Limited which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Details can be found on the Financial Services register (registration number 110002). Registered Office: Scottish Friendly House, 16 Blythswood Square, Glasgow G2 4HJ. 

Who provides SunLife Pet Insurance

SunLife Pet Insurance is arranged and administered by BDML Connect Limited. BDML Connect Limited is authorised and regulated by the Financial Conduct Authority (No. 309140). Registered in England and Wales Number 02785540. Registered Office: 45 Westerham Road, Bessels Green, Sevenoaks, Kent, TN13 2QB.

Who provides SunLife Home Insurance

SunLife Home Insurance is arranged and administered by BISL Limited and underwritten by a panel of insurers. BISL Limited are an intermediary authorised and regulated by the Financial Conduct Authority. Registered in England no. 03231094. Registered office Pegasus House, Bakewell Road, Orton Southgate, Peterborough PE2 6YS.

Who provides SunLife Car Insurance

SunLife Car Insurance is arranged and administered by BISL Limited and underwritten by a panel of insurers. BISL Limited are an intermediary authorised and regulated by the Financial Conduct Authority. Registered in England no. 03231094. Registered office Pegasus House, Bakewell Road, Orton Southgate, Peterborough PE2 6YS.