Dunstan Thomas commission new major national study into the finances of the UK’s Baby Boomers aged 58 to 75

18th April 2022

Dunstan Thomas, the pensions specialist fintech, has commissioned a nationwide study to explore the financial health of the UK’s Baby Boomer generation. This research follows Dunstan Thomas’ 2017 study into the retirement journeys of Baby Boomers, mapping out the changes in the UK landscape over the last 5 years.

Key findings include:

25% of 58-75 year olds are seeking out financial advice in preparation for retirement

A quarter of Baby Boomers plan to or have already used regulated financial advice to gain more knowledge about pensions before they fully retire. A further 15% plan to use, or have already used, guidance services from the likes of Citizens Advice Bureau, MoneyHelper and Pension Wise services. 6% use digital services such as live chats and 15 per cent derive their pensions knowledge from the personal finance pages of national newspapers. Boomers are seeking financial advice for specific areas like inheritance tax planning and avoiding ‘over drawdown’.

Nearly 40% of Baby Boomers are likely to work beyond state pension age

In fact, 38% of Boomers are set to retire later than the current state pension age of 66. The average length of time that this group plan to work on beyond their 66th birthday is 4.3 years. It means this growing group will be, on average over 70 when they fully retire. The average retirement age of this generation is rising steadily and now stands at 63.4 years, our study found.

40% of Baby Boomers aged 58 and over with defined contribution (DC) pensions do not remember receiving a wake up pack

A further 30% believe they never received a wake-up pack, according to research from Dunstan Thomas. The survey also found that, of the 30 per cent that do remember receiving it, the average age of receipt was 60.5 years.

This is despite regulatory changes introduced in November 2019 that required wake-up packs to be delivered when prospective retirees turned 50, then every five years until they have fully crystallised their pensions, meaning that every pension-holding Baby Boomer should have received at least one pack by now.

DB vs DC

Just under half (48%) of Boomers are still benefitting from DB pensions which provides a solid baseline of Retirement Income for those that have saved for more than 10 years into one. Whilst State Pensions, DC Personal Pensions, ISAs and other investments often support variable ‘lifestyle’ expenditure for the lucky half.

One of the principal findings of the survey was that those with DB pensions can rely on them, on average for 51% of their entire retirement income, as opposed to DC pensionholders which see their pensions as delivering just 37% of their total retirement income. Decent DB pensions provide a solid bedrock for Retirement Income for many Boomers.

Intergenerational subsidisation

We also found that intergenerational subsidisation is on the rise as more Boomers continue supporting their children and even grandchildren deep into retirement.

The PLSA’s Retirement Living Standards figures also suggest a total moderate living standard group budget for ‘helping others’, including providing grandchildren with gifts and helping their children pay for school uniforms and/or school trips for their children would be no more than £600 (or £50 per month).

However, our research finds that the level of subsidisation that many Boomers are providing is not properly allowed for in PLSA’s estimates. For example, we found that 23% of Boomers are financially supporting their children in retirement and the average number of years they expect to keep this up once they have retired is 9.6 years.

And This intergenerational subsidisation is increasingly spreading to a second generation – Boomers’ grandchildren. The Dunstan Thomas study found that 16% of Boomers are supporting their grandchild(ren) financially and nearly half of these Boomers are financially supporting 3 or more grandchildren.

There are lots more findings to explore in our full report, to be released in June.