The average wealth for 50 to 64 year olds who are economically inactive due to ill health is just £57,000, according to a new report from longevity think tank Phoenix Insights.
It found that this is less than 5 per cent of the average wealth of those who chose to retire early (£1.24mn).
The average wealth of those who are out of work to look after family is £137,000.
The figures show around 27 per cent, or 3,547,000 people, aged 50 to 64 are currently economically inactive, and further analysis suggests this includes around 900,000 who have left work since the pandemic.
The research found there are wide regional differences when it comes to the reasons behind over 50s leaving the workplace, with a clear divide between the Midlands and the North and London and the South East.
For example, 50 to 64 year olds in Yorkshire and the Humber are twice as likely to have left the workforce early due to sickness or disability compared to those in London and the South East (24 per cent versus 12 per cent).
People in London are the most likely to have left the workforce early to look after family (17 per cent).
Catherine Foot, director of Phoenix Insights, said: “Our latest research shows the government should urgently develop initiatives to meet the challenges of economic inactivity among the over 50s, or risk a worsening financial vulnerability among our ageing population.
“This should be approached at a local level as there are huge differences in the drivers of inactivity across the UK.
“It’s important not to dismiss economic inactivity in this group as a case of rich baby boomers choosing to enjoy time on the golf course.
“Stereotypes like this mask real financial and health vulnerability among a group whose successful return to employment will be critical to the UK’s productivity and prospects for economic growth.”
Phoenix Insights said a package of policy measures will be needed to address economic inactivity among the over 50s.
Over half (55 per cent) of over 50s believe older workers are being left behind in employment and just one in seven (14 per cent) said that support for older workers is sufficient to encourage them to remain in or return to work.
Phoenix Insights’ made six recommendations for the government to tackle economic inactivity amongst the over 50s.
- Take a regional approach - by enabling Combined Authorities and others working at a local level to tackle the specific drivers of economic inactivity in their region.
- Work with employers - by taking a sectoral approach that recognises the specific reasons people are leaving different industries.
- Create more flexibility - by responding to the strong preferences over 50s show for being able to work more flexibly.
- Improve people’s quality of work - by focusing on the importance of job satisfaction for keeping people in work or encouraging them to return, especially for those who feel financially comfortable enough to retire.
- Improve the provision of financial and careers advice - by finding new ways to ensure this group have access to guidance about their personal financial security and their options for staying in or returning to work.
- Take a long term approach - by improving the experience of work for people below the 50-64 age group, recognising that the reasons people leave the workforce early are a product of issues, such as low job satisfaction or poor health, that develop over time.
Foot said: “The demographic fact of our ageing population has been hiding in plain sight for decades, warning us that it is critical that we become much more effective at supporting people to stay in good quality work throughout their 50s and 60s.
“I hope that this focus on reversing economic inactivity will finally help focus minds and action on this very important issue in our labour market.”
sonia.rach@ft.com
