Financial shocks sink over-60s into poverty

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