Full-time employment for pensioners could potentially grant them tax-exempt earnings
Pensioner Poverty: A Persistent Challenge in the UK and US
The issue of pensioner poverty continues to be a significant concern in both the United Kingdom and the United States. Recent statistics show that the problem is particularly acute in these two countries.
In the United Kingdom
Almost one in six pensioners currently experience relative poverty, with the figure rising to one in three for some groups. Women approaching retirement expect over £5,000 less private pension income than men, and nearly 15 million working-age adults are undersaving for retirement. The UK government has revived its Pensions Commission to address these issues and build a more sustainable, fair pension system for the future. Without action, retirees in 2050 are projected to have around 8% less private pension income than today's retirees.
In the United States
In major cities, 16.5% of older residents live below the poverty level, with another 10.1% having low incomes just above the poverty line. The older population has grown 33% in a decade, exacerbating poverty and income challenges among seniors. As a result, more U.S. residents are working past retirement age, often out of necessity rather than choice. Only 5% of American retirees feel financially comfortable, while 19% report struggling. Concerns exist about potential Social Security payment cuts, which could double the poverty rate among U.S. seniors.
Reforms and Responses
In the UK, the government is actively working through the revived Pensions Commission to develop a national strategy by 2027 to confront pensioner poverty and improve the pension savings culture, especially targeting low earners and marginalized groups. The U.S. response includes public awareness of the need to work longer and save more, but no major federal reform targeting pensioner poverty was detailed in the recent data.
The active pension, a reform aimed at people who voluntarily remain in the workforce after reaching the regular retirement age, is set to be implemented in the UK from 2026. This reform could provide some relief for struggling pensioners, as it allows for additional incomes of up to €2,000 per month to be fully tax-free.
Social associations in both countries have been calling for structural reforms for years to address the issue of pensioner poverty. The risk of poverty among older people has significantly increased in recent years, driven by inadequate savings, demographic shifts, and structural inequalities.
In conclusion, pensioner poverty remains a significant challenge in both countries, and more needs to be done to address this issue. The UK is undertaking formal reforms via the Pensions Commission, while the U.S. faces growing hardship among seniors with limited policy changes reported so far.
Other areas needing attention to alleviate pensioner poverty are the realms of health-and-wellness and workplace-wellness. Incorporating fitness-and-exercise programs, mental-health support, and nutrition education could improve the overall well-being of pensioners, enabling them to maintain their health and financial independence longer.
The UK government, through the revived Pensions Commission, is committed to developing strategies that promote a more proactive approach towards health-and-wellness in the workplace, helping pensioners stay active and healthy.
In the United States, focusing on health-and-wellness education, particularly for underserved communities, could bridge the income gap and help seniors live more fulfilling, financially independent lives. Such initiatives can play a vital role in combating pensioner poverty and enhancing overall well-being among older populations.
