Revealed: Which age group has been hardest hit by the cost of living crisis?

Usually, your 50s and 60s are a time to look forward to, or even start, your retirement. After years of working hard to save for the future, you might be planning how you’d like to use your pension pot.

For many in this age bracket, though, the prospect of imminent retirement is more stressful than exciting. Recent research has revealed that those aged between 50 and 59 are more concerned about their finances since the start of the cost of living crisis than any other age group.

Rising prices have undoubtedly placed a strain on many areas of life. If you’re feeling concerned about how cost pressures could affect your approaching retirement, read on to learn why working with a financial planner could help to ease those fears.  

People in their 50s have been hardest hit by the cost of living crisis

Research reported by MoneyAge has revealed that those aged between 50 and 59 have been the hardest hit by the cost of living crisis. The study found that 21% of people in this age group have needed to withdraw cash from their long-term savings in response to higher living costs.

Moreover, the research found that 37% of people in this age bracket felt “very or fairly stressed” about their finances, compared to 27% of those under 50, and 17% of those aged over 60.

Multiple financial responsibilities could be behind the additional strain

While rising prices can affect everybody, the researchers shared some suggestions as to why those in their 50s may be experiencing greater financial strain.

The first is that many may still need to provide financial support to their adult children. The Guardian reports that one in four first-time buyers under 25 rely on the Bank of Mum and Dad to get onto the property ladder.

The second is the prospect of ageing parents who may also require support, financial or otherwise.

The Office for National Statistics shares that, in 2021, people aged between 55 and 64 were most likely to be providing unpaid care to family members. Women in this age group were more likely to be providing care than men.  

The conflation of responsibilities on people in this age group has led them to be known as the “sandwich generation”. It is by no means a new phenomenon – the term was first used in 1975 – but the recent cost of living crisis is likely to have exacerbated the financial challenges that they face.

A financial planner can help you to feel more confident about the future

You might think of a financial planner as someone who deals in facts and figures. While this is a big part of how they can help, there is another vital function of their role: providing you with peace of mind.

In a recent report, FTAdviser shared that 66% of advisers felt that providing reassurance was their main role during the cost of living crisis. Additionally, the report showed that 46% of people felt extremely or very worried about costs, but this figure dropped to 21% of people who had sought financial advice.

Here are three ways a financial planner can help you to feel more confident in your finances, both during and after the cost of living crisis.

1. They can help you to consider the short and the long term

When the future feels daunting, it’s easy to bury your head in the sand and hope for the best. This isn’t likely to help you plan effectively for retirement or mitigate any of the financial pressures you’re currently facing.

By working with a planner, you can consider your current financial responsibilities alongside your long-term needs. When you know what you want to achieve in the future, you can start to create a financial plan that supports this.

Your planner may use cashflow modelling to help you with this. It’s a piece of software that allows you to see how much your assets and income could be worth later on, and identify any potential shortfalls so that you can address them sooner rather than later.

2. They can help you to protect yourself and your family financially

One of the possible causes of stress during this period of your life is the worry of what could happen if you were unable to work.

When you are supporting multiple people who would otherwise be financially vulnerable, the impact of being unable to earn an income for a period of time could be significant.

Fortunately, there are ways to protect yourself and your family if this were to happen. Your financial planner can assess the risks and recommend a protection plan that’s suitable for your needs. This might include income protection, life insurance, or critical illness cover.

3. They can help you to save as efficiently as possible

Working with a financial planner means you can meet regularly to review your savings and investments and be sure that each of them is working for you. In doing so, they can help you to identify opportunities to save more tax-efficiently or balance your investment portfolio more effectively.

While there’s no guarantee that your investments will grow, building a portfolio according to your own personal risk profile could give your wealth the chance to generate positive returns.

Get in touch

We’re a financial planning firm based in Towcester providing dependable, forward-thinking advice. If you’re concerned about how your current financial responsibilities could affect your retirement, we can help.

Email theteam@fortitudefp.co.uk or call us on 01327 354321.

Please note

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

The Financial Conduct Authority does not regulate cashflow planning.

Note that financial protection plans typically have no cash in value at any time and cover will cease at the end of the term. If premiums stop, then cover will lapse. Cover is subject to terms and conditions and may have exclusions.

This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.