New research - ‘Maximising the Longevity Dividend’ - suggests that far being a burden, the spending power of older people is set to grow significantly over the next two decades.

The report published at the International Longevity Centre UK’s recent Future of Ageing conference reveals that:

• By 2040, older people will be spending 63p in every pound spent in the UK economy – rising from 54p in 2018.
• Older people are spending across the economy. The top three growing sectors for older consumers are recreation and culture; transport and household goods and services.
• Tackling the barriers to older people’s spending could add 2% (or £47 billion) to UK GDP a year, by 2040.

For the savings and investment sector the report says that too many older people may be over cautious, keeping their money in poorly performing bank accounts rather than investing more wisely.

The report says: “Too often, rather than being invested productively, savings end up in low-interest bank accounts."

An over-cautious attitude to risk, concerns about running out of money and lack of advice are cited as some of the reasons but the report also suggests there needs to be a much better approach to reaching and serving older clients.

Sponsors of the report include Aviva, L&G, Prudential and EY as well as other household names.

The ILC says that rather than being just a ‘risk’ to the economy the UK’s ageing population will bring economic opportunities through their growing spending, working and earning power.

The report found that households headed by someone aged 50 and over have dominated total expenditure (excluding housing costs) since 2013.

Spending by older consumers will continue to rise significantly over the coming decades, from 54% (£319 billion) of total consumer spending in 2018 to 63% by 2040 (£550 billion).

According to the ILC’s analysis, tackling barriers to spending by people aged 75 and over could add 2% (or £47 billion) to GDP a year by 2040.

The share of the workforce aged 50 and over rose from 26% in 2004 to 32% in 2018, and could account for 37% by 2040.

People aged 50 and over earned 30% of total earnings (£237bn) in 2018 and this is expected to rise to 40% by 2040 (£311 bn).

David Sinclair, director of the ILC, said: “There are enormous gains to be made by individual businesses and for the economy as a whole if we can unlock the spending and earning power of older adults.”

“But too many people face barriers to working and spending in later life – issues like inaccessible high streets, poorly designed products, and age discriminatory attitudes require a serious response. We’ve become accustomed to hearing our ageing population talked about as a bad thing – but the reality is it could be an opportunity.”

“However, we won’t realise this ‘longevity dividend’ through blind optimism about ageing. Instead, we need concerted action to tackle the barriers to spending and working in later life.”